Working Paper: CEPR ID: DP5448
Authors: Antoni Calvó-Armengol; Thierry Verdier; Yves Zenou
Abstract: This paper analyses the interplay between social structure and information exchange in two competing activities, crime and labour. We consider a dynamic model in which individuals belong to mutually exclusive two-person groups, referred to as dyads. There are multiple equilibria. If jobs are badly paid and/or crime is profitable, unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities. If, instead, jobs are well paid and/or crime is not profitable, unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities. Also, in segregated neighbourhoods characterized by high interactions between peers, a policy only based on punishment and arrest will not be efficient in reducing crime. It has to be accompanied by other types of policies that take into account social interactions.
Keywords: crime; forward-looking agents; labour market; social interaction
JEL Codes: A14; J40; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unemployment benefits (J65) | crime rates (K42) |
| job profitability (L21) | unemployment benefits (J65) |
| social interactions (Z13) | crime rates (K42) |
| unemployment benefits (J65) | unemployment duration (J64) |
| unemployment duration (J64) | crime rates (K42) |
| job profitability (L21) | crime rates (K42) |
| social cohesion policies + punitive policies (J18) | crime rates (K42) |