Numerous studies document that criminal activity is positively related to unemployment and negatively related to educational attainment levels within given communities. We study this phenomenon in the context of a search-equilibrium model, in which agents choose between formal employment and pursuing crime-related activities (theft). Prior to their "occupational choices," agents undertake costly schooling, raising their productivity. Crime acts, in essence, as a tax on human capital by affecting the probability that a worker's earnings (possessions) are subsequently appropriated. There are multiple equilibria. High crime, low levels of educational attainment, long spells of unemployment, and poverty are correlated across them.
ASJC Scopus subject areas
- Economics and Econometrics