The strength of weak ties in crime

The aim of this paper is to investigate whether weak ties play an important role in explaining criminal activities. We first develop a model where individuals learn about crime opportunities by interacting with other peers. These interactions can take the form of either strong or weak ties. We find that increasing the percentage of weak ties induces more transitions from non-crime to crime and thus the crime rate in the economy increases. This is because, when the percentage of weak ties is high, delinquents and non-delinquents are in close contact with each other. We then test these predictions using the U.S. National Longitudinal Survey of Adolescent Health (AddHealth), which contains unique detailed informations on friendship relationships among teenagers. The theoretical predictions of our model are confirmed by the empirical analysis since we find that weak ties, as measured by friends of friends, have a positive impact on criminal activities.     

Family ties and employment behavior: The role of financial intermediaries

We study the interaction effect of financial intermediaries and family ties on labor participation and employment type in China. Although existing studies examine these effects separately, we investigate the effects of both factors in one model. We give empirical evidence to support earlier arguments that family ties negatively affect labor force participation and positively affect self‐/family‐employment behavior and that financial development positively affects labor force participation. Departing from the extant literature, our results overall indicate a compensating effect of financial intermediaries for family ties in labor participation and employment type. We further argue that there are gender, urban/rural, and age differences in the role of financial intermediaries. The effect of financial intermediaries on the strength of family ties is more relevant for female, rural, and younger people compared to male, urban, and older people.     

Strong contagion with weak spillovers

In this paper, we develop an explanation for why events in one market may trigger similar events in other markets, even though at first sight the markets appear to be only weakly related. We allow for escape dynamics in each market, and show that an escape in one market is contagious because it more than doubles the probability of a similar escape in another market. We claim that contagion is strong since escapes become highly synchronised across markets. Spillovers are weak because the instantaneous spillover of events from one market to another is small. To illustrate our result, we demonstrate how a currency crisis may be contagious with only weak links between countries. Other examples where weak spillovers would create strong contagion are various models of monetary policy, imperfect competition and endogenous growth.     

COPS and crime

The Violent Crime Control and Law Enforcement Act of 1994 established the Community Oriented Policing Services (COPS) program that provided grants to states and localities to pay up to 75% of the cost for new police hires for 3 years. To date, the COPS program has awarded almost $5 billion in hiring grants paying for 64,000 new police officers. We use annual data from 1990 through 2001 from 2074 cities with populations in excess of 10,000 to show that for each officer paid for by grant funds, the size of the force expands by 0.70 officers. The size of COPS grants are correlated with population and crime rates, but not the pre-COPS time trends in crime rates or the size of the police force. This allows us to use the size of COPS grants as an instrument for the size of the police force in regressions where crime is the outcome of interest. These models indicate that police added to the force by COPS generated statistically significant reductions in auto thefts, burglaries, robberies, and aggravated assaults.     

Informality,public employment and employment protection in developing countries

This paper proposes an equilibrium matching model for developing countries’ labor markets where the interaction between public, formal private and informal private sectors are taken into account. Theoretical analysis shows that gains from reforms aiming at liberalizing formal labor markets can be annulled by shifts in the public sector employment and wage policies. Since the public sector accounts for a substantial share of employment in developing countries, this approach is crucial to understand the main labor market outcomes of such economies. Wages offered by the public sector increase the outside option value of the workers during the bargaining processes in the formal and informal sectors. It becomes more profitable for workers to search on-the-job, in order to move to these more attractive and more stable types of jobs. The public sector therefore acts as an additional tax for the formal private firms. Using data on workers’ flows from Egypt, we show empirically and theoretically that the liberalization of labor markets plays against informal employment by increasing the profitability, and hence job creations, of formal jobs. The latter effect is however dampened or even sometimes nullified by the increase of the offered wages in the public sector observed at the same time.     

Modelling crime and punishment

This paper provides an extended supply of labour model which allows for different intensities of legal and illegal (criminal) activities and in which criminal activities may be considered both as work and leisure. Heterogeneity of individuals is also taken into account. The model is estimated from Finnish aggregate time-series data, pooled Finnish municipalities data and pooled international cross-country data. With the Finnish aggregate data, a volume index of crime is constructed and then used in testing the model. All empirical results give strong support to the hypothesis that apprehension and punishment are important deterrents of crime. By contrast, the role of sosioeconomic and demographic variables turns out to be of little importance.     

Modeling crime in Japan

This study aims at identifying the factors of aggregate and disaggregate crime categories in Japan over the period 1964–2009. All crime categories are related to police outlays, police numbers, unemployment, divorce and urbanization rates. Bounds testing approach to cointegration is implemented to test the existence of a long-run relationship amongst the variables. Cointegration analysis yields that the main deterrent effect on crime is the police presence and this factor is further confirmed by the real police outlays. As for the essential cause of crime, urbanization stands as the leading factor which is followed by divorce and unemployment rates. Policy implications are discussed.     

Casinos and campus crime

This work examines the hypothesized positive relationship between casinos and local crime rates. Analysis of reported crime data for 173 residential colleges and universities in four Midwestern states suggests that robberies and motor vehicle thefts, but not burglaries, are significantly higher in number for campuses located within 10 miles of a casino.     

Guns and crime revisited

I focus on the effect of changes in public security (policing) on private security measures that potential victims can take. In particular, I look at the tradeoff between different types of private security measures – such as using or carrying guns, carrying less cash or keeping less valuables at home, and using burglar alarms or Lojack – and study how this tradeoff is affected by changes in public security. If private householders’ direct security expenses are strongly substitutable with public policing (e.g., for guns which may be more useful in badly policed areas), an increase in policing results in a drop in these expenses; it also results in carrying or keeping less cash (an indirect security measure which reduces the prize a criminal can seize). If, however, householders’ direct security expenses are “complementary” to policing in the sense that they are more effective when police response is rapid (e.g., for burglar alarms), more policing increases these expenses unless the efficacy of joint (public and private) security expenses on combating crime encounters very sharply diminishing returns; moreover, a rise in policing also induces carrying or keeping more cash. An increase in penalties increases the tendency to keep cash on hand, and also reduces crime, provided that as private precautions increase, with policing constant, it takes a larger increment in security spending to compensate for a specific drop in penalties. The results are consistent with some empirical trends in crime rates, policing, penalties and private precautions.     

Mixed markets and crime

This paper specifies and solves a two-stage, game theoretic model of a mixed market for crime control. In the first stage of the model, private targets and the government choose levels of policing. In the second stage, criminals choose targets and the severity of the crimes that they commit.The paper's key results are as follows. First, private policing can both divert crime to targets that lack private protection and also increase the severity of the crime that these less-protected targets suffer. Second, an increase in private policing reduces the aggregate expenditure on traditional policing. This is an instance of a political incentive externality, where private policing affects the objective function of the government. Specifically, it reduces the level of traditional policing that is consistent with the Samuelson condition for efficient provision of a public good. Third, the substitution of private for public policing carries with it a change in the technology of policing. In effect, private policing leads to a shift from enforcement and punishment towards monitoring and target hardening. This, in turn, may lead to an increase in the severity of crime. Fourth, the mixed policing equilibrium is inefficient, and, in some situations, mixing may reduce the utility of all targets.     

Strategy-proof contract auctions and the role of ties

A contract auction establishes a contract between a center and one of the bidders. As contracts may describe many terms, preferences over contracts typically display indifferences. The Qualitative Vickrey Auction (QVA) selects the best contract for the winner that is at least as good for the center as any of the contracts offered by the non-winning players. When each bidder can always offer a contract with higher utility for the center at an arbitrarily small loss of her own utility, the QVA is the only mechanism that is individually rational, strategy-proof, selects stable outcomes, and is Pareto efficient. For general continuous utility functions, a variant of the QVA involving fixed tie-breaking is strategy-proof and also selects stable outcomes. However, there is no mechanism in this setting that in addition also selects Pareto efficient outcomes.     

Organized crime and wage inequality

This paper stresses the role of industrial organization of crime, and explores how organized crime affects wage inequality. We find that, when only unskilled workers (or both skilled and unskilled workers) engage in organized crime, an increase in the number of criminal groups will increase wage inequality if (1) the skilled sector is more capital intensive than the unskilled sector, and (2) the price elasticity of demand for the skilled product is large enough. However, when there are only skilled workers engaging in organized crime, condition (1) is sufficient to widen wage inequality, irrespective of the price elasticity.     

Testing,crime and punishment

The recent passage of the No Child Left Behind Act of 2001 solidified a national trend toward increased student testing for the purpose of evaluating public schools. This new environment for schools provides strong incentives for schools to alter the ways in which they deliver educational services. This paper investigates whether schools may employ discipline for misbehavior as a tool to bolster aggregate test performance. To do so, this paper utilizes an extraordinary data set constructed from the school district administrative records of a subset of the school districts in Florida during the 4 years surrounding the introduction of a high-stakes testing regime.It compares the suspensions of students involved in each of the 41,803 incidents in which two students were suspended and where prior test scores for both students are observed. While schools always tend to assign harsher punishments to low-performing students than to high-performing students throughout the year, this gap grows substantially during the testing window.Moreover, this testing window-related gap is only observed for students in testing grades. In summary, schools apparently act on the incentive to re-shape the testing pool through selective discipline in response to accountability pressures.     

Housing prices and crime perception

In this article, we combine data from the housing market with data from a victimization survey to estimate the effect of crime perception on housing prices in the City of Barcelona from 2004 to 2006. Using dwelling data and a hedonic price model (using both OLS and quantile regressions), in the first stage, we estimate the shadow price of the location of dwellings. In the second stage, we analyse the impact of crime perception, after controlling for other district characteristics such as local public spending and immigration, on this locational valuation. After accounting for the possible endogeneity of crime and housing prices, our findings suggest that crime exerts relevant costs beyond its direct costs. Indeed, a one standard deviation increase in perceived security is associated with a 0.57 % increase in the valuation of districts. Moreover, in districts perceived as being less safe than the average for the City of Barcelona, houses are highly discounted. Less safe districts have on average a valuation that is 1.27 % lower.     

Income inequality and crime in the United States

This paper investigates the relationship between income inequality and crime. Results show that there is a strong and robust effect of relative income inequality on burglary. Effect on robbery is also strong and robust in most cases.     

Pollution abatement and employment

Morgenstern et al. (J Environ Econ Manag 43:412–436, 2002. doi: 10.1006/jeem.2001.1191) are well-known for its investigation of the employment effects of environmental regulations. However, the cost function specified in that paper is handicapped by its reliance on survey data of the costs of inputs assigned to pollution abatement. In this paper, we specify an input distance function that models the joint production of good and bad outputs. This allows us to measure the relative importance of factors associated with changes in employment without pollution abatement cost data. We operationalize our model using a sample of 80 coal-fired electric power plants from 1995 to 2005.     

Common trends and common cycles in regional crime

This paper uses the Vahid and Engle (Journal of Applied Econometrics, 8, 341-360, 1993) common trend - common cycle approach to model the dynamics of regional crime rates in England over the period 1975–1996. The evidence indicates the existence of common trends and common cycles in regional crime rates. This result is exploited to examine the system-wide effects of shocks emanating in a particular region.     

Terror and the costs of crime

This paper argues that terrorism, beyond its immediate impact on innocent victims, also raises the costs of crime, and therefore, imposes a negative externality on potential criminals. Terrorism raises the costs of crime through two channels: (i) by increasing the presence and activity of the police force, and (ii) causing more people to stay at home rather than going out for leisure activities. Our analysis exploits a panel of 120 fatal terror attacks and all reported crimes for 17 districts throughout Israel between 2000 and 2005. After controlling for the fixed-effect of each district and for district-specific time trends, we show that terror attacks reduce property crimes such as burglary, auto-theft, and thefts-from-cars. Terror also reduces assaults and aggravated assaults which occur in private homes, but increases incidents of trespassing and “disrupting the police.” Taken as a whole, the results are consistent with a stronger deterrence effect produced by an increased police presence after a terror attack. A higher level of policing is likely to catch more people trespassing, and at the same time, reduce the number of property crimes. The decline in crimes committed in private houses is likely an indication that the tendency for individuals to stay home after a terror attack further increases the costs of crime.     

Compulsory schooling laws and school crime

Extensive literature demonstrates that compulsory schooling laws improve educational attainment, well-being, civic involvement, and labour market outcomes. However, at-risk youth incapacitated to schools may impact the learning environment and school safety. The purpose of this article is to study whether raising the minimum dropout age (MDA) requirement above 16 increases crime committed within US public high schools. A difference-in-difference estimation exploits changes in state-level MDA laws over time and indicates that schools in states that raise their MDA requirement to 18 incur more overall crime relative to schools in states that do not, while no effect on overall crime is identified when the MDA requirement is raised to 17. Furthermore, these effects persist for 4 years after passage and more intensely in metropolitan areas. Coupling this research with existing literature suggests that when the MDA requirement is raised to 18, only a small portion of the observed reduction in juvenile crime is displaced to schools. Analysis by category of crime reveals schools incur more physical attacks, no change in illegal drug and property crimes, and fewer violent crimes in states that raise their MDA requirement to 18, while illegal drug crimes increase in states that raise their MDA requirement to 17.