Crime, Ethics and Occupational Choice: Endogenous Sorting in a Closed Model

John Conley and Ping Wang

No 402, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: We consider a simple model in which agents are endowed with heterogeneous abilities and differing degrees of honesty. Agents choose either to become criminals or invest in education and become workers instead. The model is closed in that all criminal proceeds are stolen from agents working in the formal sector and that expenditures on both deterrence and punishment of criminals are paid for through taxes levied on workers. Thus, although we assume that there no direct interactive effects among criminals, criminals crowd each other in two ways: positively in that enforcement and punishment resources become more widely diffused as more agents commit crimes, and negatively in that the presence of more criminals implies that there is less loot to be divided over a larger number of thieves. We establish the possibility of multiple equilibria and characterize the equilibrium properties. We then evaluate the effectiveness of deterrence policies under a balanced government budget.

Keywords: Criminal Behavior; Educational Choice; Punishment (search for similar items in EconPapers)
JEL-codes: I2 J62 K42 (search for similar items in EconPapers)
Date: 2004-01
New Economics Papers: this item is included in nep-edu, nep-lab and nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:0402

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