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Employment, Dynamic Deterrence and Crime

  • Imai, Susumu

    (Pennsylvania State U)

  • Krishna, Kala

Using monthly panel data we solve and estimate, using maximum likelihood techniques, an explicitly dynamic model of criminal behavior where current criminal activity adversely affects future employment outcomes. This acts as dynamic deterrence to crime: the threat of future adverse effects on employment payoffs when caught committing crimes reduces the incentive to commit them. We show that this dynamic deterrence effect is strong in the data. Hence, policies which weaken dynamic deterrence will be less effective in fighting crime. This suggests that prevention is more powerful than redemption since the latter weakens dynamic deterrence as anticipated future redemption allows criminals to look forward to negating the consequences of their crimes. Static models of criminal behavior neglect this and hence sole reliance on them can result in misleading policy analysis.

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Paper provided by Pennsylvania State University, Department of Economics in its series Working Papers with number 1-01-2.

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Date of creation: Jan 2001
Date of revision:
Handle: RePEc:ecl:peneco:1-01-2
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  1. Grogger, Jeffrey, 1995. "The Effect of Arrests on the Employment and Earnings of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 51-71, February.
  2. John Rust, 1997. "Using Randomization to Break the Curse of Dimensionality," Econometrica, Econometric Society, vol. 65(3), pages 487-516, May.
  3. Lance Lochner, 2007. "Individual Perceptions of the Criminal Justice System," American Economic Review, American Economic Association, vol. 97(1), pages 444-460, March.
  4. Steven D. Levitt, 1998. "Juvenile Crime and Punishment," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1156-1185, December.
  5. Zvi Eckstein & Kenneth I. Wolpin, 1999. "Why Youths Drop Out of High School: The Impact of Preferences, Opportunities, and Abilities," Econometrica, Econometric Society, vol. 67(6), pages 1295-1340, November.
  6. Lochner, L., 1999. "Education, Work, and Crime: Theory and Evidence," RCER Working Papers 465, University of Rochester - Center for Economic Research (RCER).
  7. Imrohoroglu, A. & Merlo, A. & Rupert, P., 2000. "What Accounts for the Decline in Crime?," Working Papers 00-11, C.V. Starr Center for Applied Economics, New York University.
  8. Levitt, Steven D, 1996. "The Effect of Prison Population Size on Crime Rates: Evidence from Prison Overcrowding Litigation," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 319-51, May.
  9. Richard B. Freeman, 1996. "Why Do So Many Young American Men Commit Crimes and What Might We Do about It?," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 25-42, Winter.
  10. Edward L. Glaeser & Bruce Sacerdote & Jose A. Scheinkman, 1995. "Crime and Social Interactions," NBER Working Papers 5026, National Bureau of Economic Research, Inc.
  11. Joel Waldfogel, 1994. " The Effect of Criminal Conviction on Income and the Trust "Reposed in the Workmen"," Journal of Human Resources, University of Wisconsin Press, vol. 29(1), pages 62-81.
  12. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
  13. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  14. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-91, October.
  15. Jenny Williams & Robin C. Sickles, 1998. "Intertemporal Model of Rational Criminal Choice," School of Economics Working Papers 1998-03, University of Adelaide, School of Economics.
  16. Leung, S.F., 1992. "An Economic Analsysis of the Age-Crime Profile," RCER Working Papers 321, University of Rochester - Center for Economic Research (RCER).
  17. Helen V. Tauchen & Ann Dryden Witte & Harriet Griesinger, 1988. "Deterrence, Work and Crime: Revisiting the Issues with Birth Cohort Data," NBER Working Papers 2508, National Bureau of Economic Research, Inc.
  18. Jenny Williams, 2000. "An Intertemporal Model of Rational Criminal Choice," Econometric Society World Congress 2000 Contributed Papers 1336, Econometric Society.
  19. 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.
  20. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
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