EDUCATION,WORK, AND CRIME: A HUMAN CAPITAL APPROACH*

This article develops a model of crime in which human capital increases the opportunity cost of crime from foregone work and expected costs associated with incarceration. Older, more intelligent, and more educated adults should commit fewer street (unskilled) crimes. White collar crimes decline less (or increase) with age and education. Predictions for age–crime and education–crime relationships receive broad empirical support in self‐report data from the National Longitudinal Survey of Youth and arrest data from the Uniform Crime Reports. The effects of education, training, and wage subsidies, as well as enforcement policies on criminal behavior are discussed.     

Crime and corruption in transitional economies: lessons for Cuba

Trends in aggregate crime rates across Europe reveal significant increases in crime in transitional countries. We identify causal mechanisms associated with the economic transition. Historical experience of corruption in the Soviet Union is reviewed, and connections between corruption and transition are analyzed. We apply the results to Cuba's current circumstances, examining the potential for growth in crime and corruption in Cuba and suggesting policies to ameliorate it.     

Examining the link between crime and unemployment: a time-series analysis for Canada

We use national and regional Canadian data to analyse the relationship between economic activity (as reflected by the unemployment rate) and crime rates. Given potential aggregation bias, we disaggregate the crime data and look at the relationship between six different types of crimes rates and unemployment rate; we also disaggregate the data by region. We employ an error correction model in our analysis to test for short-run and long-run dynamics. We find no evidence of long-run relationship between crime and unemployment, when we look at both disaggregation by type of crime and disaggregation by region. Lack of evidence of a long-run relationship indicates we have no evidence of the motivation hypothesis. For selected types of property crimes, we find some evidence of a significant negative short-run relationship between crime and unemployment, lending support to the opportunity hypothesis. Inclusion of control variables in the panel analysis does not alter the findings, qualitatively or quantitatively.     

Crime,apprehension and clearance rates: Panel data evidence from Canadian provinces

The Becker model of crime establishes the importance of the probability of apprehension as a key factor in a rational individual's decision to commit a crime. In this respect, most empirical studies based on US data have relied on variation in the number of police officers to estimate the impact of the probability of apprehension or capture. We measure the probability of apprehension by clearance rates and study their effects on crime rates, employing a panel of Canadian provinces from 1986 to 2005. OLS, GMM, GLS and IV estimates yield statistically significant elasticities of clearance rates, ranging from ?0.2 to ?0.4 for violent crimes and from ?0.5 to ?0.6 for property crimes. These findings reflect the importance of police force crime‐solving productivity.     

The effects of gun control on crimes: a spatial interactive fixed effects approach

This paper examines the effect of right-to-carry laws on crimes. We relax the assumption that unobserved time effects have homogeneous impacts on states; therefore, states with right-to-carry laws may follow different time trends which might be stronger or weaker than those of other states including states with no right-to-carry laws. The heterogeneous time trends are modeled by a factor structure where time factors represent time-varying unobservables, and factor loadings account for their heterogeneous impacts across states. No assumption is imposed on the shape of the time trend. Crime statistics exhibit spatial dependence, and a state’s adoption of right-to-carry law may have external effects on its neighboring states. Using a dynamic spatial panel model with interactive effects, we find positive spatial spillovers in crime rates. Depending on a crime category, an average \(1\%\) reduction in crime rates in neighboring states can decrease crime rates by 0.069–0.287%, with property crimes exhibiting higher degrees of spatial dependence than violent crimes. We find that although the passage of right-to-carry laws has no significant effects on the overall violent or property crime rates, they lead to short-term increases in robbery and medium-term decreases in murder rates. The results are robust to the number of factors, a different sample ending point, and some alternative spatial weights matrices and model specifications.     

Crime and economic growth: A case study of Manaus,Brazil

Brazil became the seventh largest economy in the world in 2012. In the same year, the country was responsible for 13% of all worldwide murders. Despite the economic advances, crime is increasing over time in the country. This study explores the impact of organized crime on local economies, focusing on the case of Manaus, Brazil, and the emergence of the criminal group Família do Norte (FDN). We employ a synthetic control method to analyze the economic effects of the FDN's presence in Manaus. The findings reveal a significant negative impact on the city's economic growth and prosperity, with Manaus experiencing a 2% per year lower GDP per capita compared to what it would have been without the FDN. Robustness checks confirme this result, showing how organized crime can disrupt the country's economic advances.     

Chinese import competition,crime, and government transfers in US

This paper exploits the exogenous rise of Chinese imports in US to investigate the effect of import competition on crime at the county level. The results indicate that counties with high exposure to Chinese import competition have high crime rates. The exposure effect on property crime is much larger than that on violent crime. A one standard deviation increase in exposure causes 32 more violent crimes in the county, while such increase in exposure causes 256 more property crimes. Interestingly, we find that the crime impact of exposure to Chinese import competition becomes smaller in counties with high government transfers.     

Strong and weak ties in employment and crime

This paper analyzes the interplay between social structure and information exchange in two competing activities, crime and labor. We consider a dynamic model in which individuals belong to mutually exclusive two-person groups, referred to as dyads. There are multiple equilibria. If jobs are badly paid and/or crime is profitable, unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities. If, instead, jobs are well paid and/or crime is not profitable, unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities. Also, in segregated neighborhoods characterized by high interactions between peers, a policy only based on punishment and arrest will not be efficient in reducing crime. It has to be accompanied by other types of policies that take into account social interactions.     

Does state-level per capita income affect juvenile delinquency? An empirical analysis for Indian states

While average juvenile crime rates across India has dropped in recent decades, juvenile property crime rates (total juvenile crimes divided by state population) has actually gone up from 15% in 2000-01 to about 20% in 2013-14. There is huge variation across states when it comes to juvenile crime rates. The literature on juvenile crime in the Indian context is scant. This paper aims to fill the gap in the literature by undertaking a comprehensive analysis of juvenile delinquency related to property crimes across Indian states. Results show that state income per capita has a non-linear impact on incidences of juvenile crime across Indian states - rising when the income starts growing for relatively poorer states but increasing at a diminishing rate when state income per capita rises further. When a poor state gets relatively richer, both opportunities to commit crime and returns from property crime increases. However, as the state grows even richer, growth of employment and state facilities including rehabilitation and redistribution, improve. Further, we find that states with the lowest income per capita and highest level of adult crime face the steepest increase in juvenile crime rates for a rise in state income per capita.     

EMPLOYMENT,DETERRENCE, AND CRIME IN A DYNAMIC MODEL*

Using maximum likelihood techniques and monthly panel data we solve and estimate an explicitly dynamic model of criminal behavior where current criminal activity impacts future labor market outcomes. We show that the threat of future adverse effects in the labor market when arrested acts as a strong deterrent to crime. Moreover, such forward‐looking behavior is estimated to be important. Hence, policies that weaken this deterrence will be much less effective in fighting crime. This suggests that prevention is more powerful than redemption since anticipated redemption allows criminals to look forward to negating the consequences of their crimes.     

Violent crime and punishment: an application of the LISREL model

Public anxiety over violent crime has forged a broad consensus to purchase more crime control. Recently, the President brought into law a federal anti-crime bill that will put an additional 100 000 police on the nation's streets. This paper presents empirical evidence on the deterrence effect of police presence. The principal finding is that police presence deters commission of violent crimes by increasing the risk of being punished for committing those crimes. This risk is modelled as a latent variable, because the probability and severity of punishment for committing a violent crime are generally communicated in an onconsistant fashion. The violent crime commission rate is also treated as a latent variable, because it is almost certainly afflicted with measurement error.     

Trade-offs in the allocation of prosecution resources: an opportunity cost of overcriminalization

One in every five citizens has a criminal record in Korea. Scarce prosecution resources have been severely skewed toward prosecuting more ‘legislated crime’ than ‘conventional crime’. We estimate the opportunity cost of this prosecutory pattern in terms of spillovers to conventional crimes. The cost was found to be substantial. For example, in 2003, the total spillovers accounted for approximately 25% of the increase in conventional crimes for 3 years from 2000 because of the disproportionate prosecutory focus on legislated crimes compared with that of the 1990s. This article has relevance to those countries with an overcriminalizing trend for legislated crimes.     

Foreign direct investment and industry response to organized crime: The Mexican case

Organized crime is a disincentive for investment and business activity. We use murders as a proxy for presence of regional organized crime and study the relation between direct foreign investment and organized crime for different industries in Mexico. Our contribution is the focus on sectoral differences. The data is for net foreign direct investment from 116 countries into the 32 Mexican states from 2004 to 2010. Imputing causality, we find that organized crime deters foreign investment in financial services, commerce, and agriculture, but not oil and mining sectors for which we find increased crime associated with increased investment. There is no effect of organized crime on foreign investment in manufacturing.     

Racial stereotypes and robbery

Robbery is a serious, widespread and sometimes violent crime resulting each year in costs to victims of several billion dollars. Data on the incidence of robbery reveals certain striking racial disparities. African-Americans are more likely to be victims, arrestees and prisoners than are members of other demographic groups, and while black-on-white robberies are very common, white-on-black robberies are extremely rare. The disparities for robbery are also much greater than those for other crimes of acquisition. We develop a model of robbery that attempts to address these and other stylized facts. Robberies are typically interactions between strangers that involve a sequence of rapid decisions with severely limited information. Potential offenders must assess the likelihood of victim resistance, and victims must assess the likelihood that resistance will be met with violence. Racial disparities in the distribution of income can cause such probability assessments to be race-contingent, affecting crime rates as well as rates of resistance and violence. We argue that this model helps account for several empirical regularities that appear puzzling from the perspective of alternative theories of crime.     

Does longer incarceration deter or incapacitate crime? Evidence from Truth-in-Sentencing reform

This article evaluates how Truth-in-Sentencing (TIS) laws impact both violent and property crimes through mandating violent offenders to serve a substantial proportion of sentenced terms before being eligible to release to community supervision. Focusing on states with effective TIS laws, I utilize the difference-in-differences design to investigate the treatment effect of TIS on crime. I observe statistically significant decline in both violent and property crimes in TIS states. A series of placebo tests confirm the robustness of the estimates and inferences. The dynamic impact of TIS is heterogeneous among the seven categories of violent and property crimes in TIS states: murder and robbery rates decline almost immediately after TIS, while property crime takes longer time to exhibit significant decline.     

Inequality and criminality revisited: further evidence from Brazil

The objective of this study is to shed light on the determinants of criminality rates in Brazil. A panel data model was estimated using Brazilian states’ data. Our main result suggests that income inequality plays an important role in the determination of the crime rate. Furthermore, there are evidence suggesting that both unemployment and urbanization rates are positively related to crime. Based on a GMM approach we find the existence of an “inertial effect” on criminality. Besides that, the GMM results show that public security spending is effective in reducing criminality rates. Contrary to the common wisdom, we could not find evidence that poverty increases violent crimes. Finally, we have evidence that income inequality Granger causes crime, but not the reverse.     

The Optimal Use of Fines and Imprisonment If Governments Do Not Maximize Welfare

We consider a stylized model of crime and punishment in which the prosecution policy is defined by three variables: the size of punishment, the type of punishment, and the detection probability. We derive the optimal type of punishment under the assumption that the detection probability is chosen by a government whose objective function places a higher weight on the government's budget than the social welfare function does. We show that for serious crimes exclusive imprisonment is welfare maximizing. If costs of imprisonment are taken into account, the optimal punishment is a prison term with an additional fine that is smaller or equal to the costs of the prison term. For less serious crimes, fines without imprisonment are welfare maximizing. Therefore, this paper demonstrates that the standard result of the literature that fines should be used whenever feasible need not hold in the presence of a rent‐seeking government. Moreover, it offers a new explanation for the widespread use of mandatory imprisonment for serious crimes.     

What causes violent crime?

This study uses panel data of intentional homicide and robbery rates for a sample of developed and developing countries for the period 1970-1994, based on information from the United Nations World Crime Surveys, to analyze the determinants of national crime rates both across countries and over time. A simple model of the incentives to commit crimes is proposed, which explicitly considers possible causes of the persistence of crime over time (criminal inertia). A panel-data based GMM methodology is used to estimate a dynamic model of national crime rates. This estimator controls for unobserved country-specific effects, the joint endogeneity of some of the explanatory variables, and the existence of some types of measurement errors afflicting the crime data. The results show that increases in income inequality raise crime rates, crime tends to be counter-cyclical, and criminal inertia is significant.     

Does economic freedom really kill? On the association between ‘Neoliberal’ policies and homicide rates

This paper investigates recent claims that ‘neoliberal’ policies and reforms are associated with higher homicide rates and other types of crime. Using a panel of the 50 US states observed between 1981 and 2011 and the Economic Freedom Index of the Fraser Institute, results show that there is no direct association between changes in economic policies as measured by this index and homicide rates. The results nevertheless show that other non-violent types of crime decrease with spending or tax policy.     

The effect of reporting errors on the cross-country relationship between inequality and crime

This paper analyzes reporting errors in crime data to see how they impact econometric estimates, particularly of the key relationship between inequality and crime. Criminal victimization surveys of 140,000 respondents in 37 industrial, transition and developing countries are used. Comparing the crimes experienced by these respondents with those reported to the police, non-random and mean-reverting errors are apparent. Time-varying factors affect the propensity of victims to report crimes to the police, undermining the use of country-specific fixed effects as a means of dealing with measurement error in official crime data. These errors substantially attenuate both cross-sectional and panel estimates of the partial correlation between inequality and crime.