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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, 1998. "An Economic Analysis of a Drug-Selling Gang's Finances," NBER Working Papers 6592, National Bureau of Economic Research, Inc.
  2. 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.
  3. 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.
  4. Raphael, Steven & WINTER-EBMER, RUDOLF, 1998. "Identifying the Effect of Unemployment on Crime," University of California at San Diego, Economics Working Paper Series qt5hb4h56g, Department of Economics, UC San Diego.
  5. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  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. Denis Fougère & Francis Kramarz & Julien Pouget, 2009. "Youth Unemployment and Crime in France," Journal of the European Economic Association, MIT Press, vol. 7(5), pages 909-938, 09.
  2. Robert Dur, 2006. "Status-Seeking in Criminal Subcultures and the Double Dividend of Zero-Tolerance," CESifo Working Paper Series 1762, CESifo Group Munich.
  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. 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 24, Verein für Socialpolitik, Research Committee Development Economics.
  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 2011:34, Lund University, Department of Economics.

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