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Employment, Dynamic Deterrence and Crime

  • Susumu Imai
  • Kala Krishna

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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File URL: http://www.nber.org/papers/w8281.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8281.

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Date of creation: May 2001
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Publication status: published as Imai, Susumu and Kala Krishna. “Employment, Dynamic Deterrence and Crime.” International Economic Review 45, 3 (2004): 845-872.
Handle: RePEc:nbr:nberwo:8281
Note: LS
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  1. Leung, Siu Fai, 1994. "An economic analysis of the age-crime profile," Journal of Economic Dynamics and Control, Elsevier, vol. 18(2), pages 481-497, March.
  2. 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.
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  10. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-91, October.
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  13. Ayse Imrohoroglu & Antonio Merlo & Peter Rupert, 2000. "What accounts for the decline in crime?," Working Paper 0008, Federal Reserve Bank of Cleveland.
  14. Lochner, L., 1999. "Education, Work, and Crime: Theory and Evidence," RCER Working Papers 465, University of Rochester - Center for Economic Research (RCER).
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  16. 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.
  17. Jenny Williams, 2000. "An Intertemporal Model of Rational Criminal Choice," Econometric Society World Congress 2000 Contributed Papers 1336, Econometric Society.
  18. 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.
  19. Steven D. Levitt, 1998. "Juvenile Crime and Punishment," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1156-1185, December.
  20. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
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