Poverty traps, economic inequality and delinquent incentives
This paper explores theoretical linkages between poverty traps, economic inequality and delinquency in a two sector overlapping generations model under perfect competition in which barriers to skilled educational attainment and delinquent incentives interact. We find that the existence of a poverty trap under high economic inequality and costly indivisible human capital investments generate persistent delinquency. We study shocks that increase skilled wages or reduce assets for the unskilled and find that these temporal shocks produce an outburst of delinquency in the short run that die out later on. If the shock is permanent then delinquency increases permanently in the long run. Furthermore, we find that when law enforcement policies increase deterrence and incapacitation permanently delinquency dimineshes en the long run but is accompanied by an increase in wealth inequality. We also find that subsidies for human capital investments can have an ambiguous effect on delinquency in the long run.
|Date of creation:||31 Jan 2010|
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- Lance Lochner, 2010.
"Education Policy and Crime,"
University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers
20102, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
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