Urban Crime and Labor Mobility

Two municipalities within a metropolitan statistical area (MSA) determine the level of local law enforcement. Enforcement reduces and diverts crime. The former confers a spillover benefit; the latter a spillover cost. When labor is mobile, welfare necessarily declines: if enforcement is too high (low) under labor immobility, it is raised (reduced) further under mobility. If municipalities have different enforcement costs, mobility reduces welfare for the high‐cost municipality and for the MSA, but the effect is ambiguous on the low‐cost municipality. Finally, when residents choose between productive and criminal activities, enforcement is more likely to be overprovided.