Center for Economic Research, Department of Economics, University of Minnesota
In this paper we consider a general equilibrium model where heterogeneous agents specialize
either in legitimate market activities or in criminal activities and majority rule determines
the share of income redistributed and the expenditures devoted to the apprehension of
criminals. We calibrate our model to the U.S. economy in 1990, and we conduct simulation
exercises to evaluate the effectiveness of expenditures on police protection and income
redistribution at reducing crime. We find that while expenditures on police protection
reduce crime, it is possible for the crime rate to increase with redistribution. We also show
that economies that adopt relatively more generous redistribution policies may have either
higher or lower crime rates than economies with relatively less generous redistribution
policies, depending on the characteristics of their wage distribution and on the efficiency
of their apprehension technology.
Imrohoroglu, A., Merlo, A. and Rupert, P., (1996), "On the Political Economy of Income Redistribution and Crime", Discussion Paper No. 291, Center for Economic Research, Department of Economics, University of Minnesota.
Imrohoroglu, Ayse; Merlo, Antonio; Rupert, Peter.
On the Political Economy of Income Redistribution and Crime.
Center for Economic Research, Department of Economics, University of Minnesota.
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