Working Paper: NBER ID: w4910
Authors: Richard B. Freeman
Abstract: This paper presents evidence on the relation among incarceration, crime, and the economic incentives to crime, ranging from unemployment to income inequality. It makes three points: 1) The U.S. has incarcerated an extraordinarily high proportion of men of working age overall, and among blacks. In 1993 the number incarcerated was 1.9 percent of the male work force; among blacks, the number incarcerated was 8.8 percent of the work force. 2) The rising trend in incarceration should have reduced the rate of crime, through the incapacitation of criminals and through the deterrent effect of potential arrest and imprisonment. But administrative records show no such drop in crime and the victims survey shows a fall far below what could be expected on the basis of incapacitation by itself. 3) The implication is that there was an increased propensity to commit crime among the non-institutional population. The paper focuses attention on the possibility that the continued high rate of crime in the U.S., despite massive imprisonment of criminals may be one of the costs of the rising inequality in the country, and in particular of the falling real earnings of the less educated. While we lack a 'smoking gun' for such a relation, the preponderance of evidence suggests that economic incentives have played a role in the increased propensity to commit crime.
Keywords: crime; job market; incarceration; economic incentives; unemployment
JEL Codes: K42; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rising economic inequality (D31) | increased propensity to commit crime (K42) |
| falling real earnings for less skilled workers (F66) | increased propensity to commit crime (K42) |
| economic incentives (M52) | decision to engage in criminal activity (K42) |
| higher returns to crime (K42) | decision to engage in criminal activity (K42) |
| rising economic inequality (D31) | increase in crime rates (K42) |
| falling real earnings for less skilled workers (F66) | increase in crime rates (K42) |
| rising trend in incarceration (K14) | reduction in crime rates (K14) |