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Structural Estimation of a Becker-Ehrlich Equilibrium Model of Crime: Allocating Police Across Cities to Reduce Crime

Chao Fu and Kenneth I Wolpin

Review of Economic Studies, 2018, vol. 85, issue 4, 2097-2138

Abstract: We develop a model of crime in which the number of police, the crime rate, the arrest rate, the employment rate, and the wage rate are joint outcomes of a subgame perfect Nash equilibrium. The local government chooses the size of its police force and citizens choose among work, home, and crime alternatives. We estimate the model using metropolitan statistical area (MSA)-level data. We use the estimated model to examine the effects on crime of targeted federal transfers to local governments to increase police. We find that knowledge about unobserved MSA-specific attributes is critical for the optimal allocation of police across MSA’s.

Keywords: Crime; Multiple equilibria; Estimation; Efficient police allocation (search for similar items in EconPapers)
JEL-codes: J2 K42 (search for similar items in EconPapers)
Date: 2018
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