Strong and Weak Ties in Employment and Crime
Paris School of Economics (PSE); Delta - Ecole Normale Superieure (ENS); Centre for Economic Policy Research (CEPR)
Autonomous University of Barcelona - Department of Economics; Institute for the Study of Labor (IZA)
Stockholm University; Research Institute of Industrial Economics (IUI); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)
CEPR Discussion Paper No. 5448
This paper analyses the interplay between social structure and information exchange in two competing activities, crime and labour. 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 neighbourhoods 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.
Number of Pages in PDF File: 46
Keywords: Social interaction, crime, labour market, forward-looking agents
JEL Classification: A14, J40, K42working papers series
Date posted: April 25, 2006
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