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Unemployment and Gang Crime: Could Prosperity Backfire?

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  • Panu Poutvaara

    ()

  • Mikael Priks

Abstract

Empirical evidence reveals that unemployment tends to increase property crime but that it has no effect on violent crime. To explain these facts, we examine a model of criminal gangs and suggest that there is a substitution effect between property crime and violent crime at work. In the model, non-monetary valuation of gang membership is private knowledge. Thus the leaders face a trade-off between less crime per member in large gangs and more crime per member in small gangs. Unemployment increases the relative attractiveness of large and less violent gangs engaging more in property crime.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2007/wp-cesifo-2007-03/cesifo1_wp1944.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1944.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1944

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Related research

Keywords: violence; crime; gangs; unemployment; identity;

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References

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  1. Steven D. Levitt & Sudhir Alladi Venkatesh, 2000. "An Economic Analysis Of A Drug-Selling Gang'S Finances," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(3), pages 755-789, August.
  2. Abdalla Mansour & Nicolas Marceau & Steeve Mongrain, 2001. "Gangs and Crime Deterrence," Cahiers de recherche CREFE / CREFE Working Papers, CREFE, Université du Québec à Montréal 138, CREFE, Université du Québec à Montréal.
  3. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 33(1), pages 23-39, May.
  4. Raphael, Steven & Winter-Ember, Rudolf, 2001. "Identifying the Effect of Unemployment on Crime," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 44(1), pages 259-83, April.
  5. Steven D. Levitt, 2004. "Understanding Why Crime Fell in the 1990s: Four Factors that Explain the Decline and Six that Do Not," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 18(1), pages 163-190, Winter.
  6. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(3), pages 715-753, August.
  7. Stergios Skaperdas, 2001. "The political economy of organized crime: providing protection when the state does not," Economics of Governance, Springer, Springer, vol. 2(3), pages 173-202, November.
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Cited by:
  1. Ouattara, Bazoumana & Amegashie, J. Atsu & Strobl, Eric, 2009. "Moral Hazard and the Composition of Transfers: Theory with an Application to Foreign Aid," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009, Verein für Socialpolitik, Research Committee Development Economics 24, Verein für Socialpolitik, Research Committee Development Economics.
  2. Fougère, Denis & Kramarz, Francis & Pouget, Julien, 2006. "Youth Unemployment and Crime in France," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5600, C.E.P.R. Discussion Papers.
  3. Robert Dur, 2006. "Status-Seeking in Criminal Subcultures and the Double Dividend of Zero-Tolerance," CESifo Working Paper Series, CESifo Group Munich 1762, CESifo Group Munich.
  4. Seals, Richard Alan & Stern, Liliana V., 2013. "Cognitive ability and the division of labor in urban ghettos: Evidence from gang activity in U.S. data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 44(C), pages 140-149.
  5. Almén, Daniel & Nordin, Martin, 2011. "Long term unemployment and violent crimes - using post-2000 data to reinvestigate the relationship between unemployment and crime," Working Papers, Lund University, Department of Economics 2011:34, Lund University, Department of Economics.

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