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Unemployment and Gang Crime: Could Prosperity Backfire?

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Author Info
Panu Poutvaara ()
Mikael Priks ()

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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/DocCIDL/cesifo1_wp1944.pdf
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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 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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Find related papers by JEL classification:
D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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  1. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May. [Downloadable!] (restricted)
  2. 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, vol. 18(1), pages 163-190, Winter. [Downloadable!] (restricted)
  3. Stergios Skaperdas, 2001. "The political economy of organized crime: providing protection when the state does not," Economics of Governance, Springer, vol. 2(3), pages 173-202, November.
  4. Steven D. Levitt & Sudhir Alladi Venkatesh, 2000. "An Economic Analysis Of A Drug-Selling Gang'S Finances," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 755-789, August. [Downloadable!] (restricted)
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  5. Abdala Mansour & Nicolas Marceau & Steeve Mongrain, 2006. "Gangs and Crime Deterrence," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(2), pages 315-339, October. [Downloadable!] (restricted)
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  6. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August. [Downloadable!] (restricted)
  7. Steven Raphael & Rudolf Winter-Ebmer, 1998. "Identifying the Effect of Unemployment on Crime," University of California at San Diego, Economics Working Paper Series 98-19, Department of Economics, UC San Diego. [Downloadable!]
    Other versions:
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