Crime, Inequality, and Unemployment, Second Version

32 Pages Posted: 26 Nov 2003

See all articles by Ken Burdett

Ken Burdett

University of Pennsylvania - Department of Economics

Ricardo Lagos

New York University (NYU) - Department of Economics

Randall Wright

University of Wisconsin - Madison - Department of Finance, Investment and Banking; Federal Reserve Banks - Federal Reserve Bank of Minneapolis

Date Written: September 2003

Abstract

There is much discussion of the relationships between crime, inequality, and unemployment. We construct a model where all three are endogenous. We find that introducing crime into otherwise standard models of labor markets has several interesting implications. For example, it can lead to wage inequality among homogeneous workers. Also, it can generate multiple equilibria in natural but previously unexplored ways; hence two identical neighborhoods can end up with different levels of crime, inequality, and unemployment. We discuss the effects of anti-crime policies like changing jail sentences, as well as more traditional labor market policies like changing unemployment insurance.

Note: A previous version of this paper can be found at: http://ssrn.com/abstract=339160

JEL Classification: D83, J64

Suggested Citation

Burdett, Ken and Lagos, Ricardo and Wright, Randall D., Crime, Inequality, and Unemployment, Second Version (September 2003). PIER Working Paper No. 03-029. Available at SSRN: https://ssrn.com/abstract=470922 or http://dx.doi.org/10.2139/ssrn.470922

Ken Burdett

University of Pennsylvania - Department of Economics ( email )

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Ricardo Lagos

New York University (NYU) - Department of Economics ( email )

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Randall D. Wright (Contact Author)

University of Wisconsin - Madison - Department of Finance, Investment and Banking ( email )

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Madison, WI 53706
United States
608-263-3860 (Phone)

Federal Reserve Banks - Federal Reserve Bank of Minneapolis

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Minneapolis, MN 55480
United States

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