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A Poverty Trap of Crime and Unemployment

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  • Luciano Mauro
  • Gaetano Carmeci

Abstract

We present an overlapping generation growth model with an imperfect labor market where the links among crime, growth and unemployment are jointly considered, both in an endogenous and exogenous set‐up. We test the major implications of our theory and verify the two model specifications through the Italian regional data, using the Pooled Mean Group estimator proposed by Pesaran, Shin and Smith (1999). The empirical results are in favor of the exogenous version of the model and suggest that crime and unemployment have long‐run income level effects.

Suggested Citation

  • Luciano Mauro & Gaetano Carmeci, 2007. "A Poverty Trap of Crime and Unemployment," Review of Development Economics, Wiley Blackwell, vol. 11(3), pages 450-462, August.
    • Handle: RePEc:bla:rdevec:v:11:y:2007:i:3:p:450-462
    DOI: 10.1111/j.1467-9361.2006.00350.x
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    References listed on IDEAS

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    1. Gaviria, Alejandro, 2002. "Assessing the effects of corruption and crime on firm performance: evidence from Latin America," Emerging Markets Review, Elsevier, vol. 3(3), pages 245-268, September.
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