Property Rights,Predation, and Productivity*

I develop a neoclassical growth model with imperfect property rights in which predation entails both waste of resources and deadweight losses. According to the model, in the United States, the welfare costs of crime represent a loss of 18.6 percent of consumption per capita. This loss is 57.8 percent for a country in the average of the last decile of the distribution of an index of business costs of crime across 94 countries. An increase of one standard deviation in the institutional quality index increases GDP per worker by 23 percent for a country in the average of the last decile of its distribution.