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Unemployment and Gang Crime: Could Prosperity Backfire?

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  • Poutvaara, Panu

    ()
    (University of Munich)

  • Priks, Mikael

    ()
    (University of Munich)

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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2710.

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Length: 17 pages
Date of creation: Mar 2007
Date of revision:
Publication status: published as 'Unemployment and gang crime: can prosperity backfire?' in: Economics of Governance, 2011, 12 (3), 259 - 273
Handle: RePEc:iza:izadps:dp2710

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Keywords: unemployment; gangs; crime; violence; identity;

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  1. 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.
  2. 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.
  3. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May.
  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. 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.
  6. Raphael, Steven & Winter-Ember, Rudolf, 2001. "Identifying the Effect of Unemployment on Crime," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 259-83, April.
  7. 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.
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Cited by:
  1. Robert Dur & Joël Van Der Weele, 2013. "Status-Seeking in Criminal Subcultures and the Double Dividend of Zero-Tolerance," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(1), pages 77-93, 02.
  2. 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.
  3. Amegashie, J. Atsu & Ouattara, Bazoumanna & Strobl, Eric, 2007. "Moral Hazard and the Composition of Transfers: Theory with an Application to Foreign Aid," MPRA Paper 3158, University Library of Munich, Germany, revised 06 May 2007.
  4. 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.
  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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