Citation

Huang CC, Laing D, Wang P. Int. Econ. Rev. 2004; 45(3): 909-938.

Copyright

(Copyright © 2004, Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association, Publisher John Wiley and Sons)

DOI

10.1111/j.0020-6598.2004.00291.x

PMID

unavailable

Abstract

Numerous studies document that criminal activity is positively related to unemployment and negatively related to educational attainment levels within given communities. We study this phenomenon in the context of a search-equilibrium model, in which agents choose between formal employment and pursuing crime-related activities (theft). Prior to their "occupational choices," agents undertake costly schooling, raising their productivity. Crime acts, in essence, as a tax on human capital by affecting the probability that a worker's earnings (possessions) are subsequently appropriated. There are multiple equilibria. High crime, low levels of educational attainment, long spells of unemployment, and poverty are correlated across them.