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Unemployment and gang crime: Can prosperity backfire?

Panu Poutvaara () and Mikael Priks

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: In this paper, we study how unemployment affects gang crime. We examine a model of criminal gangs and suggest that a substitution effect between petty crime and severe crime is at work. In the model, non-monetary valuation of gang membership is private knowledge. Thus, the leaders face a trade-off between less crime per member in large gangs and more crime per member in small gangs. A decrease in unemployment may result in a switch from a large gang that requires petty crime to a small gang that requires severe crime.

Date: 2011
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Published in Economics of Governance 3 12(2011): pp. 259-273

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