Crime, Immigration and the Labor Market: A General Equilibrium Model
Does immigration cause crime? To answer this question, we build a two-country general equilibrium model with search costs in which the migration (in/out-)flows, the crime rates and the equilibrium wages in the two countries are determined by the interaction between the labor market, the crime market and the decision to migrate. The main result of our model is that, in equilibrium, the relationship between immigration and crime depends on the conditions of both the labor and crime markets of the two countries. In particular, when the tightness of the labor market is sufficiently elastic relative to that of the crime market, immigration causes a reduction in the domestic crime rate of the host country. An implication of this result is that migration flows from countries with strong work rigidities to societies characterized by more elastic labor markets are mutually benefic in terms of reducing the corresponding crime rates.
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