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.
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Poutvaara, P., Priks, M. Unemployment and gang crime: can prosperity backfire?. Econ Gov 12, 259–273 (2011). https://doi.org/10.1007/s10101-011-0094-2
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DOI: https://doi.org/10.1007/s10101-011-0094-2