Crime and Economic Incentives

Posted: 7 Aug 2015

See all articles by Mirko Draca

Mirko Draca

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Harvard University - Edmond J. Safra Center for Ethics; University of Warwick - Department of Economics

Stephen J. Machin

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); London School of Economics & Political Science (LSE) - Department of Economics

Date Written: August 2015

Abstract

In economic models of crime, changing economic incentives alter the participation of individuals in criminal activities. We critically appraise the work in this area. After a brief overview of the workhorse economics of crime model for organizing our discussion on crime and economic incentives, we first document the significant rise of the economics of crime as a research field and then go on to review the evidence on the relationship between crime and economic incentives. We divide this discussion into incentives operating through legal wages in the formal labor market and the economic returns to illegal activities. Evidence that economic incentives matter for crime emerges from both.

Suggested Citation

Draca, Mirko and Machin, Stephen J., Crime and Economic Incentives (August 2015). Annual Review of Economics, Vol. 7, pp. 389-408, 2015, Available at SSRN: https://ssrn.com/abstract=2640085 or http://dx.doi.org/10.1146/annurev-economics-080614-115808

Mirko Draca (Contact Author)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
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Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
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Cambridge, MA 02138
United States

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Stephen J. Machin

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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