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Inequality, Crime and Economic Growth. A Classical Argument for Distributional Equality

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Author Info
Stefan Josten ()
Abstract

This paper studies the dynamic general-equilibrium interactions between inequality, crime and economic growth by embedding the rational choice-theoretical approach to criminal behavior in a heterogeneous-agents endogenous-growth OLG model. Based on their respective opportunity costs, individuals choose to specialize in either legal or criminal activities. While legal households contribute to aggregate goods supply over time by either working or building human capital, criminals make a living by expropriating legal citizens of part of the latter's income. An increase in inequality lowers the economy's growth rate and possesses negative welfare effects for all agents with endowments equal to or above average and for agents with endowment below average that are born sufficiently far in the future. Copyright Kluwer Academic Publishers 2003

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File URL: http://hdl.handle.net/10.1023/A:1024683431555
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Publisher Info
Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 10 (2003)
Issue (Month): 4 (August)
Pages: 435-452
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Handle: RePEc:kap:apfinm:v:10:y:2003:i:4:p:435-452

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Web page: http://springerlink.metapress.com/link.asp?id=102851

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Related research
Keywords: distribution; inequality; crime; economic growth; human capital;

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  2. Benhabib, Jess & Rustichini, Aldo, 1996. " Social Conflict and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 125-42, March.
  3. Imrohoroglu, Ayse & Merlo, Antonio & Rupert, Peter, 2000. "On the Political Economy of Income Redistribution and Crime," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 1-25, February.
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  4. Smith, Eric & Wright, Randall, 1992. "Why Is Automobile Insurance in Philadelphia So Damn Expensive?," American Economic Review, American Economic Association, vol. 82(4), pages 756-72, September. [Downloadable!] (restricted)
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  5. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Blackwell Publishing, vol. 60(1), pages 35-52, January. [Downloadable!] (restricted)
  6. Freeman, Richard B, 1996. "Why Do So Many Young American Men Commit Crimes and What Might We Do about It?," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 25-42, Winter. [Downloadable!] (restricted)
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  7. Philippe Aghion & Eve Caroli & Cecilia Garcia-Penalosa, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December. [Downloadable!] (restricted)
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  8. Laband, David N & Sophocleus, John P, 1992. "An Estimate of Resource Expenditures on Transfer Activity in the United States," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 959-83, August. [Downloadable!] (restricted)
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  10. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June. [Downloadable!] (restricted)
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  11. Herschel I. Grossman & Minseong Kim, 1996. "Inequality, Predation and Welfare," NBER Working Papers 5704, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Stigler, George J, 1970. "The Optimum Enforcement of Laws," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 526-36, May-June. [Downloadable!] (restricted)
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  13. Posner, Richard A, 1975. "The Social Costs of Monopoly and Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 807-27, August. [Downloadable!] (restricted)
  14. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April. [Downloadable!] (restricted)
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  15. Mathur, Vijay K, 1978. "Economics of Crime: An Investigation of the Deterrent Hypothesis for Urban Areas," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 459-66, August. [Downloadable!] (restricted)
  16. Saint-Paul, Gilles & Verdier, Thierry, 1993. "Education, democracy and growth," Journal of Development Economics, Elsevier, vol. 42(2), pages 399-407, December. [Downloadable!] (restricted)
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  17. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September. [Downloadable!] (restricted)
  18. Grossman, Herschel I., 1995. "Robin hood and the redistribution of property income," European Journal of Political Economy, Elsevier, vol. 11(3), pages 399-410, September. [Downloadable!] (restricted)
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