Poverty traps, economic inequality and delinquent incentives
AbstractThis paper explores theoretical linkages between poverty traps, economic inequality and delinquency in a two sector overlapping generations model under perfect competition in which barriers to skilled educational attainment and delinquent incentives interact. We find that the existence of a poverty trap under high economic inequality and costly indivisible human capital investments generate persistent delinquency. We study shocks that increase skilled wages or reduce assets for the unskilled and find that these temporal shocks produce an outburst of delinquency in the short run that die out later on. If the shock is permanent then delinquency increases permanently in the long run. Furthermore, we find that when law enforcement policies increase deterrence and incapacitation permanently delinquency dimineshes en the long run but is accompanied by an increase in wealth inequality. We also find that subsidies for human capital investments can have an ambiguous effect on delinquency in the long run.
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Bibliographic InfoPaper provided by UNIVERSIDAD JAVERIANA - BOGOTÁ in its series VNIVERSITAS ECONÓMICA with number 008214.
Date of creation: 31 Jan 2010
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Poverty Traps; Inequality; Delinquency; Human Capital;
Find related papers by JEL classification:
- I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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- Lance Lochner, 2010.
"Education Policy and Crime,"
NBER Working Papers
15894, National Bureau of Economic Research, Inc.
- Lance Lochner, 2010. "Education Policy and Crime," NBER Chapters, National Bureau of Economic Research, Inc, in: Controlling Crime: Strategies and Tradeoffs, pages 465-515 National Bureau of Economic Research, Inc.
- Lance Lochner, 2010. "Education Policy and Crime," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers, University of Western Ontario, CIBC Centre for Human Capital and Productivity 20102, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
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