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Urban crime and labor mobility

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  • Subhayu Bandyopadhyay
  • Christopher H. Wheeler

Abstract

We present a model of crime where two municipalities exist within a metro area (MSA). Consistent with the literature, local law enforcement has a crime reduction effect and a crime diversion effect. The former confers a spillover benefit to the other municipality, while the latter a spillover cost. If the net spillovers are positive (negative), then the respective Nash enforcement levels are too low (high) from the perspective of the MSA. When we allow for Tiebout type mobility, labor will move to the location offering lower disutility crime (including the tax burden). To attract labor both jurisdictions would like to raise the relative crime that exists in the competing region. Interestingly, this could raise or reduce enforcement compared to the immobility case. If it was too high (low) under immobility, it will be raised (reduced) further under mobility. In the symmetric case, neither can gain any labor, but the competition for it pushes the jurisdictions further away from the efficient (cooperative) outcome. Thus, mobility must be welfare reducing. We also consider asymmetry in the context of differences in efficiency of enforcement. The low cost municipality has the lower crime damage (inclusive of the tax burden) and attracts labor. Mobility is necessarily welfare reducing for the high cost municipality and for the MSA, but it has an ambiguous effect on the low cost municipality.

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Bibliographic Info

Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2007-046.

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Date of creation: 2007
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Handle: RePEc:fip:fedlwp:2007-046

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Keywords: Crime - Economic aspects ; Labor mobility - United States;

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  1. Santiago M. Pinto, 2007. "Tax Competition In The Presence Of Interjurisdictional Externalities: The Case Of Crime Prevention," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 897-913.
  2. Bergstrom, Theodore C & Varian, Hal R, 1985. "When Are Nash Equilibria Independent of the Distribution of Agents' Characteristics?," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 715-18, October.
  3. Mehlum, Halvor & Moene, Karl & Torvik, Ragnar, 2005. "Crime induced poverty traps," Journal of Development Economics, Elsevier, vol. 77(2), pages 325-340, August.
  4. Subhayu Bandyopadhyay & Todd Sandler, 2009. "The interplay between preemptive and defensive counterterrorism measures: a two-stage game," Working Papers 2008-034, Federal Reserve Bank of St. Louis.
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