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Education and Crime over the Lifecycle

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  • Giovanni Gallipoli

    ()
    (University College London and IFS)

  • Giulio Fella

    (Queen Mary, University of London)

Abstract

In this paper we ask whether policies targeting a reduction in crime rates through changes in education outcomes can be considered an effective and cost-viable alternative to interventions based on harsher punishment alone. In particular we study the effect of subsidizing high school completion. Most econometric studies of the impact of crime policies ignore equilibrium effects and are often reduced-form. This paper provides a framework within which to study the equilibrium impact of alternative policies. We develop an overlapping generation, life-cycle model with endogenous education and crime choices. Education and crime depend on different dimensions of heterogeneity, which takes the form of di®erences in innate ability and wealth at birth as well as employment shocks. PSID, NIPA and CPS data are used to estimate the parameters of a production function with different types of human capital and to approximate a distribution of permanent heterogeneity. These estimates are used to pin down some of the model's parameters. The model is calibrated to match education enrolments, aggregate (property) crime rate and some features of the wealth distribution. In our numerical experiments we find that policies targeting crime reduction through increases in high school graduation rates are more cost-effective than simple incapacitation policies. Furthermore, the cost-effectiveness of high school subsidies increases significantly if they are targeted at the wealth poor. We also find that financial incentives to high school graduation have radically different implications in general and partial equilibrium (i.e. the scale of the programmes can substantially change its outcomes)

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Bibliographic Info

Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2006 with number 192.

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Date of creation: 04 Jul 2006
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Handle: RePEc:sce:scecfa:192

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Keywords: Education; Crime; Equilibrium; Policy;

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References

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  1. Imrohoroglu, Ayse & Merlo, Antonio & Rupert, Peter, 1996. "On the political economy of income redistribution and crime," Bulletins 7497, University of Minnesota, Economic Development Center.
  2. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2008. "The Macroeconomic Implications of Rising Wage Inequality in the United States," NBER Working Papers 14052, National Bureau of Economic Research, Inc.
  3. Eric D. Gould & Bruce A. Weinberg & David B. Mustard, 2002. "Crime Rates And Local Labor Market Opportunities In The United States: 1979-1997," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 45-61, February.
  4. Donghoon Lee & Kenneth I. Wolpin, 2006. "Intersectoral Labor Mobility and the Growth of the Service Sector," Econometrica, Econometric Society, vol. 74(1), pages 1-46, 01.
  5. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  6. Antonio Merlo, 2001. "The Research Agenda: Dynamic Model of Crime and Punishment," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 2(2), April.
  7. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc.
  8. Lance Lochner & Enrico Moretti, 2004. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," American Economic Review, American Economic Association, vol. 94(1), pages 155-189, March.
  9. Jeff Grogger, 1997. "Market Wages and Youth Crime," NBER Working Papers 5983, National Bureau of Economic Research, Inc.
  10. Stephen Machin & Costas Meghir, 2004. "Crime and Economic Incentives," Journal of Human Resources, University of Wisconsin Press, vol. 39(4).
  11. David Domeij & Jonathan Heathcote, 2004. "On The Distributional Effects Of Reducing Capital Taxes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 523-554, 05.
  12. Edward N. Wolff, 2000. "Recent Trends in Wealth Ownership, 1983-1998," Economics Working Paper Archive wp_300, Levy Economics Institute.
  13. Marco Cozzi, 2005. "Black-White Labour Market Conditions and Property Crime in the US: A Quantitative Analysis," Computing in Economics and Finance 2005 339, Society for Computational Economics.
  14. Lance Lochner, 2004. "Education, Work, and Crime: A Human Capital Approach," NBER Working Papers 10478, National Bureau of Economic Research, Inc.
  15. Freeman, Richard B., 1999. "The economics of crime," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 52, pages 3529-3571 Elsevier.
  16. Donohue, John J, III & Siegelman, Peter, 1998. "Allocating Resources among Prisons and Social Programs in the Battle against Crime," The Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 1-43, January.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Education & crime
    by chris dillow in Stumbling and Mumbling on 2008-07-23 13:50:49
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Cited by:
  1. Denis Fougère & Francis Kramarz & Julien Pouget, 2007. "Youth Unemployment and Crime in France," Working Papers 2007-33, Centre de Recherche en Economie et Statistique.
  2. Costas Meghir & Mårten Palme & Marieke Schnabel, 2012. "The Effect of Education Policy on Crime: An Intergenerational Perspective," NBER Working Papers 18145, National Bureau of Economic Research, Inc.
  3. Pietro Vertova, 2011. "Prison Conditions and Recidivism," American Law and Economics Review, Oxford University Press, vol. 13(1), pages 103-130.
  4. Costas Meghir, 2006. "Dynamic models for policy evaluation," IFS Working Papers W06/08, Institute for Fiscal Studies.
  5. Antonio Merlo & Kenneth I. Wolpin, 2008. "The Transition from School to Jail: Youth Crime and High School Completion Among Black Males, Second Version," PIER Working Paper Archive 09-002, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 16 Jan 2009.
  6. Steve Brito & Ana Corbacho & Rene Osorio Rivas, 2014. "Remittances and the Impact on Crime in Mexico," IDB Publications 85093, Inter-American Development Bank.
  7. Antonio Merlo & Kenneth I. Wolpin, 2008. "The Transition from School to Jail: Youth Crime and High School Completion Among Black Males," PIER Working Paper Archive 08-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  8. Giulio Fella, 2011. "A generalized endogenous grid method for non-concave problems," 2011 Meeting Papers 1232, Society for Economic Dynamics.

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