Crime and Education in a Model of Information Transmission

23 Pages Posted: 28 Apr 2020

See all articles by Darwin CORTÉS

Darwin CORTÉS

Universidad del Rosario

Guido Friebel

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Darío Maldonado

Universidad de los Andes, Colombia - School of Government

Date Written: March 2020

Abstract

We model the decisions of young individuals to stay in school or drop out and engage in criminal activities. We build on the literature on human capital and crime engagement and use the framework of Banerjee (1993) that assumes that the information needed to engage in crime arrives in the form of a rumour and that individuals update their beliefs about the profitability of crime relative to education. These assumptions allow us to study the effect of social interactions on crime. In our model, we investigate informational spillovers from the actions of talented students to less talented students. We show that policies that decrease the cost of education for talented students may increase the vulnerability of less talented students to crime. The effect is exacerbated when students do not fully understand the underlying learning dynamics.

Keywords: Human capital, The economics of rumours, Social interactions, Urban economics

JEL Classification: D82, D83, I28

Suggested Citation

CORTÉS, Darwin and Friebel, Guido and Maldonado, Darío, Crime and Education in a Model of Information Transmission (March 2020). Annals of Public and Cooperative Economics, Vol. 91, Issue 1, pp. 71-93, 2020, Available at SSRN: https://ssrn.com/abstract=3586886 or http://dx.doi.org/10.1111/apce.12254

Darwin CORTÉS (Contact Author)

Universidad del Rosario

Calle 12 No. 6-25
Bogota
Colombia

Guido Friebel

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Darío Maldonado

Universidad de los Andes, Colombia - School of Government ( email )

Cra 1. No. 19 - 27. Bloque Aulas Tercer piso
Bogotá D.C.
Colombia

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