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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
Date of revision:
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. Raphael, Steven & Winter-Ebmer, Rudolf, 1999. "Identifying the Effect of Unemployment on Crime," CEPR Discussion Papers 2129, C.E.P.R. Discussion Papers.
  2. Abdalla Mansour & Nicolas Marceau & Steeve Mongrain, 2001. "Gangs and Crime Deterrence," Cahiers de recherche CREFE / CREFE Working Papers 138, CREFE, Université du Québec à Montréal.
  3. 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.
  4. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  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, vol. 18(1), pages 163-190, Winter.
  6. 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.
  7. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May.
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Cited by:
  1. Fougère, Denis & Kramarz, Francis & Pouget, Julien, 2006. "Youth Unemployment and Crime in France," CEPR Discussion Papers 5600, C.E.P.R. Discussion Papers.
  2. J. Atsu Amegashie & Bazoumana Ouattara & Eric Strobl, 2007. "Moral Hazard and the Composition of Transfers: Theory with an Application to Foreign Aid," Working Papers 0702, University of Guelph, Department of Economics and Finance.
  3. Richard Alan Seals Jr., 2011. "Cognitive Ability and the Division of Labor in Urban Ghettos: Evidence From Gang Activity in U.S. Data," Auburn Economics Working Paper Series auwp2011-03, Department of Economics, Auburn University.
  4. 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 2011:34, Lund University, Department of Economics.
  5. Dur, Robert & van der Weele, Joël, 2011. "Status-Seeking in Criminal Subcultures and the Double Dividend of Zero-Tolerance," IZA Discussion Papers 5484, Institute for the Study of Labor (IZA).

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