Crime, Inequality, and Unemployment, Second Version
32 Pages Posted: 26 Nov 2003
Date Written: September 2003
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: Suggested Citation