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Crime And Education In A Model Of Information Transmission

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  • Darwin CORTÉS
  • Guido FRIEBEL
  • Darío MALDONADO

Abstract

We model the decisions of young individuals to stay in school or drop out and engage in criminal activities. We build on the literature on human capital and crime engagement and use the framework of Banerjee (1993) that assumes that the information needed to engage in crime arrives in the form of a rumour and that individuals update their beliefs about the profitability of crime relative to education. These assumptions allow us to study the effect of social interactions on crime. In our model, we investigate informational spillovers from the actions of talented students to less talented students. We show that policies that decrease the cost of education for talented students may increase the vulnerability of less talented students to crime. The effect is exacerbated when students do not fully understand the underlying learning dynamics.

Suggested Citation

  • Darwin CORTÉS & Guido FRIEBEL & Darío MALDONADO, 2020. "Crime And Education In A Model Of Information Transmission," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(1), pages 71-93, March.
  • Handle: RePEc:bla:annpce:v:91:y:2020:i:1:p:71-93
    DOI: 10.1111/apce.12254
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Los retornos sociales de la educación: A pesar de que la sociedad gana, algunos pueden perder
      by David Bardey in Foco Económico on 2015-04-15 02:18:14

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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