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On the political economy of income redistribution and crime

  • Imrohoroglu, Ayse
  • Merlo, Antonio
  • Rupert, Peter

In this paper we consider a general equilibrium model where heterogeneous agents specialize either in legitimate market activities or in criminal activities and majority rule determines the share of income redistributed and the expenditures devoted to the apprehension of criminals. We calibrate our model to the U.S. economy in 1990, and we conduct simulation exercises to evaluate the effectiveness of expenditures on police protection and income redistribution at reducing crime. We find that while expenditures on police protection reduce crime, it is possible for the crime rate to increase with redistribution. We also show that economies that adopt relatively more generous redistribution policies may have either higher or lower crime rates than economies with relatively less generous redistribution policies, depending on the characteristics of their wage distribution and on the efficiency of their apprehension technology.

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File URL: http://purl.umn.edu/7497
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Paper provided by University of Minnesota, Economic Development Center in its series Bulletins with number 7497.

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Date of creation: 1996
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Handle: RePEc:ags:umedbu:7497
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  9. Harris, John R, 1970. "On the Economics of Law and Order," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 165-74, Jan.-Feb..
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  13. Tauchen, Helen & Witte, Ann Dryden & Griesinger, Harriet, 1994. "Criminal Deterrence: Revisiting the Issue with a Birth Cohort," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 399-412, August.
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  19. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-65, May-June.
  20. Furlong, William J., 1987. "A general equilibrium model of crime commission and prevention," Journal of Public Economics, Elsevier, vol. 34(1), pages 87-103, October.
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