analyzing the impact of the world s largest public works project on crime india started the implementation of a rural public works program in 2006 covering all districts of the country within 3 years the program guarantees 100 days of employment per year at minimum wage to each rural household with the goal of reducing joblessness and poverty we exploit the design and implementation of this program to investigate its employment impact on various types of crimes to provide rare evidence on the employment crime relationship in a developing country context we find that employment generated by the program has a negative impact on both property crime and violent crime the same conclusion is reached when we analyze the impact of the program using its staggered rollout structure as the source of identification in a difference in difference analysis although crime elasticities with respect to employment are small this finding represents another dimension of the social benefit generated by the program jel k4 e24 h54

company stock price reactions to the 2016 election shock trump taxes and trade abstract donald trump s surprise election shifted expectations corporate taxes would be lower and trade policies more restrictive relative stock prices responded appropriately high tax firms and those with large deferred tax liabilities dtls gained those with significant deferred tax assets from net operating loss carryforwards nol dtas lost domestically focused companies fared better than internationally oriented firms a price contribution analysis shows that easily assessed consequences dtls nol dtas tax rates were priced faster than more complex issues net dtls foreign exposure in sum the analysis demonstrates that expectations about tax rates greatly impact firm values

gross substitution in financial markets abstract we develop restrictions on the joint distribution of an individual s risk attitudes and their endowments which guarantee the gross substitution property for market and individual excess demand functions respectively in particular it is shown that under some mild restrictions on the agent s risk aversion gross substitution holds for sufficiently large endowments

education work and crime a human capital approach this article develops a model of crime in which human capital increases the opportunity cost of crime from foregone work and expected costs associated with incarceration older more intelligent and more educated adults should commit fewer street unskilled crimes white collar crimes decline less or increase with age and education predictions for age crime and education crime relationships receive broad empirical support in self report data from the national longitudinal survey of youth and arrest data from the uniform crime reports the effects of education training and wage subsidies as well as enforcement policies on criminal behavior are discussed

are policy platforms capitalized into equity prices evidence from the bush gore 2000 presidential election abstract this paper tests for the capitalization of policy platforms into equity prices using a sample of 70 firms favored under bush or gore platforms during the 2000 u s presidential election two sources of daily data during the six months leading up to the election are incorporated firm specific equity returns and the probability of a bush victory as implied by prices from the iowa electronic market for this group of politically sensitive firms the daily baseline estimates demonstrate that platforms are capitalized into equity prices under a bush administration relative to a counterfactual gore administration bush favored firms are worth 3 more and gore favored firms are worth 6 less implying a statistically significant differential return of 9 estimates based on weekly returns are even stronger suggesting a differential return of 16 the most sensitive sectors include tobacco worth 13 more under a favorable bush administration microsoft competitors worth 15 less under an unfavorable bush administration and alternative energy companies worth 16 less under an unfavorable bush administration a corresponding analysis of campaign contributions which allows for heterogeneity in the importance of policy platforms to the firms supports the baseline estimates

measuring positive externalities from unobservable victim precaution an empirical analysis of lojack lojack is a hidden radio transmitter device used for retrieving stolen vehicles because there is no external indication that lojack has been installed it does not directly affect the likelihood that a protected car will be stolen there may however be positive externalities due to general deterrence we find that the availability of lojack is associated with a sharp fall in auto theft rates of other crime do not change appreciably at least historically the marginal social benefit of an additional unit of lojack has been fifteen times greater than the marginal social cost in high crime areas those who install lojack however obtain less than 10 percent of the total social benefits leading to underprovision by the market

relative risk aversion with arrow debreu securities this note considers a portfolio problem with a complete set of arrow debreu securities each of which pays a positive return in only one state it is shown that an increase in the return to asset i in state i causes an increase no change a decrease in demand for asset i if and only if relative risk aversion evaluated in state i is less than equal to greater than unity demands for all other assets change in the opposite direction copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

squealer dealers the market for information in federal drug trafficking prosecutions never rat on your friends and always keep your mouth shut jimmy conway goodfellas citing his invaluable aid in the war against the mafia a federal judge yesterday rewarded a once powerful mob figure who became a major government informer by sentencing him to just five years in prison despite his admitted involvement in 19 murders the new york times september 27 19941 i introduction since the seminal theoretical work of becker 1968 the economics of crime has developed an extensive empirical literature 2 this article adds to that literature by studying markets for information in federal prosecutions of drug trafficking conspiracies in these markets law enforcement demands information that can help prosecute and imprison suspected drug traffickers while other drug traffickers supply the information 3 the price over which demanders and suppliers higgle is the size of an informer s sentence reduction 4 mustard 2001 using federal sentencing data found that different demographic groups have different rates relative quantities of providing substantial assistance the federal legal term meaning information against other defendants 5 this article adds to mustard 2001 by using federal sentencing of convicted drug traffickers to uncover whether different demographic groups have different relative prices for their information i e whether different groups receive larger sentence reductions higher prices or smaller sentence reductions lower prices when providing substantial assistance then in a simple manner similar to well known examinations of the returns to education in the 1970s and 1980s levy and mumane 1992 murphy and welch 1989 price and quantity determine whether certain groups experience different relative demand or relative supply for their testimony groups experiencing high relative demand have their information highly sought by law enforcement and therefore have high rates quantities of providing substantial assistance and large sentence reductions prices when doing so those with low relative demand have low quantities and low prices groups with high relative supply of substantial assistance have high quantities but low prices while those with low relative supply have low quantities and high prices this article further adds to the literature by going beyond demographic factors and examining what criminality related factors e g criminal history role in a criminal conspiracy and type of drug dealt affect supply and demand for information and by examining supply and demand conditional on expected prison sentence results show that women and better educated defendants experience high relative demand for information while blacks hispanics and non u s citizens experience low relative demand groups facing long prison sentences dealers of harder drugs those with long criminal histories and high level dealers have high relative supply while those facing short sentences primarily low level dealers have low relative supply when controlling for expected sentence crack dealers high level dealers and dealers with long criminal histories experience low demand race specific estimations show that women of all races experience high relative demand for information the rest of this article is organized as follows section ii discusses the federal criminal justice system emphasizing reforms established by the sentencing reform act of 1984 and the anti drug abuse act of 1986 section iii discusses the data and provides summary statistics section iv discusses my empirical methodology section v shows results and section vi attempts to explain them section vii discusses results from race specific estimations and section viii concludes ii federal criminal sentencing through most of the 1980s and before federal judges possessed near total discretion in determining sentences for criminals convicted of violating federal statutes e

crime rates and local labor market opportunities in the united states 1979 1997 the labor market prospects of young unskilled men fell dramatically in the 1980s and improved in the 1990s crime rates show a reverse pattern increasing during the 1980s and falling in the 1990s because young unskilled men commit most crime this paper seeks to establish a causal relationship between the two trends previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime and found inconclusive results in contrast this paper examines the impact of both wages and unemployment on crime and uses instrumental variables to establish causality we conclude that both wages and unemployment are significantly related to crime but that wages played a larger role in the crime trends over the last few decades these results are robust to the inclusion of deterrence variables controls for simultaneity and controlling for individual and family characteristics

building criminal capital behind bars peer effects in juvenile corrections this paper analyzes the influence that juvenile offenders serving time in the same correctional facility have on each other s subsequent criminal behavior the analysis is based on data on over 8 000 individuals serving time in 169 juvenile correctional facilities during a two year period in florida these data provide a complete record of past crimes facility assignments and arrests and adjudications in the year following release for each individual to control for the non random assignment to facilities we include facility fixed effects thereby estimating peer effects using only within facility variation over time we find strong evidence of peer effects for various categories of theft burglary and felony drug and weapon crimes the influence of peers primarily affects individuals who already have some experience in a particular crime category we also find evidence that peer effects are stronger in smaller facilities and that the predominant types of peer effects differ in residential versus non residential facilities effects in the latter are consistent with network formation among youth serving time close to home

determinants of violent and property crimes in england and wales a panel data analysis we examine various determinants of property and violent crimes by using police force area level pfa data on england and wales over the period of 1992 2008 our list of potential determinants includes two law enforcement variables namely crime specific detection rate and prison population and various socio economic variables such as unemployment rate real earnings proportion of young people and the gini coefficient by adopting a fixed effect dynamic gmm estimation methodology we attempt to address the potential bias that arises from the presence of time invariant unobserved characteristics of a pfa and the endogeneity of several regressors there is a significant positive effect of own lagged crime rate the own lagged effect is stronger for property crime on an average than violent crime we find that on an average higher detection rate and prison population leads to lower property and violent crimes this is robust to various specifications however socio economic variables with the exception

education and crime over the life cycle we compare two large scale policy interventions aimed at reducing crime subsidizing high school completion and increasing the length of prison sentences to this purpose we use a life cycle model with endogenous education and crime choices we apply the model to property crime and calibrate it to u s data we find that targeting crime reductions through increases in high school graduation rates entails large efficiency and welfare gains these gains are absent if the same crime reduction is achieved by increasing the length of sentences we also find that general equilibrium effects explain roughly one half of the reduction in crime from subsidizing high school

a dynamic model of differential human capital and criminal activity this paper presents a dynamic model of criminal activity individuals are endowed with legal and criminal human capital potential incomes in legal and criminal sectors depend on the level of the relevant human capital the rate of return and random shocks human capital can be enhanced by participating in both sectors legal human capital can also be enhanced through investment human capital is subject to depreciation individuals maximize expected discounted lifetime utility which depends on consumption the model allows analyses of the effects of recessions imprisonment rehabilitation scenarios sanctions and returns to human capital new insights such as hysteresis in criminal behaviour are obtained

mixed risk aversion abstract we analyze the class of increasing utility functions exhibiting all derivatives of alternating sign this property that we call mixed risk aversion is satisfied by the utility functions most commonly used in financial economics the utility functions displaying mixed risk aversion can be expressed as mixtures of exponential functions we characterize stochastic dominance and we find conditions for both mutual aggravation and mutual amelioration of risks when agents are mixed risk averse finally the analysis of the distribution function describing a mixed utility allows one to characterize the behaviour of its indexes of risk aversion and to discuss its implications for portfolio selection journal of economic literature classification numbers d81 g11

the effects of shifts in a return distribution on optimal portfolios when the distribution of the returns of a risky asset undergoes a stochastically dominating shift a risk averse investor may not necessarily increase the investment in that asset this paper provides restrictions on the investor s utility function that are necessary and sufficient for a dominating shift to bring about no decrease in the investment in the respective asset if there are two risky assets in the portfolio these conditions are also necessary if there are n 2 assets and are necessary and sufficient if the utility function exhibits constant absolute risk aversion copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

incarceration length employment and earnings this paper estimates effects of increases in incarceration length on employment and earnings prospects of individuals after their release from prison i utilize a variety of research designs including controlling for observable factors and using instrumental variables for incarceration length based on randomly assigned judges with different sentencing propensities the results show no consistent evidence of adverse labor market consequences of longer incarceration length using any of the analytical methods in either the state system in florida or the federal system in california

down and out in italian towns measuring the impact of economic downturns on crime the paper investigates the effect of local economic conditions on crime the study focuses on italy s local labor markets and analyzes the response of crime to the severe slump of 2007 2011 it shows that the downturn led to a significant increase in economic related offenses that do not require particular criminal skills or tools namely thefts

environmental crime and punishment empirical evidence from the german penal code u s and e u environmental policy employ criminal sanctions to enforce compliance recent moves toward revising their use are based on little empirical evidence as to their effectiveness this paper exploits a unique dataset to study the deterrent effect of criminal enforcement the dynamic panel data analysis leads to three findings first criminal sanctions do provide the intended deterrent effects second standing trial provides one of the most significant deterrents rather than the probability of conviction or the magnitude of fines third public preferences regarding environmental quality and political economy variables affect reported environmental crime

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

what do firms do when dividend tax rates change an examination of alternative payout responses abstract this paper investigates whether investor level taxes affect corporate payout policy decisions we predict and find a surge of special dividends in the final months of 2010 and 2012 immediately before individual level dividend tax rates were expected to increase we also find evidence that immediately before the expected tax increases firms altered the timing of their regular dividend payments by shifting what would normally be january regular dividend payments into the preceding december to our knowledge this is the first evidence in the literature about changes in the timing of regular dividend payments in response to tax law changes for both actions specials and shifting we find that it was more likely for a firm to respond to individual level tax rates if insiders owned a relatively large amount of the firm overall our paper provides evidence that managers consider individual level taxes in making corporate payout decisions

do state minimum wages affect the incarceration rate because of historically unprecedented increases in the prison population since the late 1970s the united states has the highest incarceration rate in the world using becker s 1968 framework on crime this study investigates the causal relationship between incarceration rates and state minimum wages our identification strategy consists of a state level fixed effects model and autor and dorn s 2013 two stage least squares 2sls approach using the historical local industry structure we predict the change in employment shares of manual task intensive occupations and use those as an instrument for state minimum wages the fixed effects and 2sls estimates suggest that a one dollar increase in state minimum wage leads to approximately 12 25 fewer incarcerations per 100 000 state residents estimates of the heterogeneous impacts by race and gender indicate that the aggregate impact of state minimum wages is entirely driven by men

how and why does immigration affect crime evidence from malaysia the perception that immigration fuels crime is an important source of anti immigrant sentiment using malaysian data for 2003 10 this paper provides estimates of the overall impact of economic imm

examining the link between crime and unemployment a time series analysis for canada we use national and regional canadian data to analyse the relationship between economic activity as reflected by the unemployment rate and crime rates given potential aggregation bias we disaggregate the crime data and look at the relationship between six different types of crimes rates and unemployment rate we also disaggregate the data by region we employ an error correction model in our analysis to test for short run and long run dynamics we find no evidence of long run relationship between crime and unemployment when we look at both disaggregation by type of crime and disaggregation by region lack of evidence of a long run relationship indicates we have no evidence of the motivation hypothesis for selected types of property crimes we find some evidence of a significant negative short run relationship between crime and unemployment lending support to the opportunity hypothesis inclusion of control variables in the panel analysis does not alter the findings qualitatively or quantitatively

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

identifying the effect of unemployment on crime abstract in this paper we analyze the relationship between unemployment and crime using u s state data we estimate the effect of unemployment on the rates of seven felony offenses we control extensively for state level demographic and economic factors and estimate specifications that include state specific time trends state effects and year effects in addition we use prime defense contracts and a state specific measure of exposure to oil shocks as instruments for unemployment rates we find significantly positive effects of unemployment on property crime rates that are stable across model specifications our estimates suggest that a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate the evidence for violent crime is considerably weaker however a closer analysis of the violent crime of rape yields some evidence that the employment prospects of males are weakly related to state rape rates

striking at the roots of crime the impact of welfare spending on crime during the great depression abstractduring the great depression contemporaries worried that people hit by hard times would resort to crime president franklin roosevelt argued that the massive government relief efforts struck at the roots of crime by providing subsistence income to needy families after constructing a panel data set for 81 large american cities for the years 1930 40 we estimate the effect of relief spending by all levels of government on crime rates the analysis suggests that a 10 percent increase in relief spending during the 1930s reduced property crime by roughly 1 5 percent by limiting the amount of relief recipients free time work relief may have been more effective than direct relief in reducing crime more generally our results indicate that social insurance which tends to be understudied in economic analyses of crime should be more explicitly and more carefully incorporated into the analysis of temporal and spatial variations in criminal activity

one for the road public transportation alcohol consumption and intoxicated driving we exploit arguably exogenous train schedule changes in washington dc to investigate the relationship between public transportation the risky decision to consume alcohol and the criminal decision to engage in alcohol impaired driving using variation over time across days of the week and over the course of the day we provide evidence that overall there was little effect of expanded public transit service on dui arrests alcohol related fatal traffic and alcohol related arrests however we find that these overall effects mask considerable heterogeneity across geographic areas specifically we find that areas where bars are within walking distance to transit stations experience increases in alcohol related arrests and decreases in dui arrests we observe no sign of behavioral changes in neighborhoods without any bars within walking distance of transit stations

crime in europe and the united states dissecting the reversal of misfortunes contrary to common perceptions today both property and violent crimes with the exception of homicides are more widespread in europe than in the united states while the opposite was true thirty years ago we label this fact as the reversal of misfortunes we investigate what accounts for the reversal by studying the causal impact of demographic changes incarceration abortion unemployment and immigration on crime for this we use time series data 1970 2008 from seven european countries and the united states we find that the demographic structure of the population and the incarceration rate are important determinants of crime our results suggest that a tougher incarceration policy may be an effective way to contrast crime in europe our analysis does not provide information on how incarceration policy should be made tougher nor does it provide an answer to the question whether such a policy would also be efficient from a cost benefit point of view we leave this to future research paolo buonanno francesco drago roberto galbiati and giulio zanella

good jobs and recidivism i estimate the impact of employment opportunities on recidivism among 1 7 million offenders released from a california prison between 1993 and 2008 the institutional structure of the california criminal justice system as well as location skill and industry specific job accession data provide a unique framework for identifying a causal effect of job availability on criminal behaviour i find that increases in construction and manufacturing opportunities at the time of release are associated with significant reductions in recidivism other types of opportunities including those characterised by lower wages that are typically accessible to individuals with criminal records do not influence recidivism

the effect of arrests on the employment and earnings of young men many young men commit crime and many are arrested i estimate the effect of arrests on the employment and earnings of arrestees using a large longitudinal data set constructed by merging police records with ui earnings data i find that the effects of arrests are moderate in magnitude and rather short lived

domestic burglaries and the real price of audio visual goods some time series evidence for britain this paper explores the relationship between the real price of audio visual goods and domestic burglaries using british data our findings suggest that the falling real price of these consumer goods has contributed to a reduction in domestic burglary activity

clicking on heaven s door the effect of immigrant legalization on crime we estimate the eect of legalization on the crime rate of immigrants by exploiting the italian policy framework as an ideal regression discontinuity design xed quotas of residence permits are available each year applications must be submitted electronically on specic click days and they are processed on a rst come rst served basis until the available quotas are exhausted by matching data on applicants including the timing of applications in milliseconds with restricted use criminal records for the year before and after click days we show that obtaining legal status reduces the probability of being reported for having committed a serious crime by 0 6 percentage points on average on a baseline crime rate of 1 percent this eect is driven by applicants that are allegedly employed by other immigrants as domestic workers but are most likely unemployed who exhibit the highest crime rate in the year before click days as well as the greatest reduction in crime after obtaining legal status by contrast applicants sponsored by rms exhibit a very low crime rate both before and after click days we conclude that undocumented immigrants confronting worse labor market opportunities are at a higher risk of committing crimes while they are also more responsive to legalization

local labor markets and criminal recidivism abstract this paper estimates the impact of local labor market conditions on criminal recidivism using administrative prison records on four million offenders released from 43 states between 2000 and 2013 exploiting the timing of each offender s release from prison i find that being released to a county with higher low skilled wages significantly decreases the risk of recidivism the impact of higher wages on recidivism is larger for both black offenders and first time offenders and in sectors that report being more willing to hire ex offenders these results are robust to individual and county level controls such as policing and corrections activity and do not appear to be driven by changes in the composition of released offenders during good or bad economic times

political uncertainty market anomalies and presidential honeymoons the first 100 days of a newly elected president s administration are often a period of substantial and concentrated policy change this paper shows that measures of uncertainty and risk aversion rise sharply during presidential honeymoons consistent with theoretical models that suggest that investors demand compensation for bearing heightened political risk we document striking spread returns to value investment and profitability anomalies during honeymoons for example the book to market value premium averages 3 51 per month during presidential honeymoons yet only 0 27 per month at other times these findings survive numerous robustness checks nonetheless establishing a direct link between escalating political risk and equity returns proves challenging

trade offs in the allocation of prosecution resources an opportunity cost of overcriminalization one in every five citizens has a criminal record in korea scarce prosecution resources have been severely skewed toward prosecuting more legislated crime than conventional crime we estimate the opportunity cost of this prosecutory pattern in terms of spillovers to conventional crimes the cost was found to be substantial for example in 2003 the total spillovers accounted for approximately 25 of the increase in conventional crimes for 3 years from 2000 because of the disproportionate prosecutory focus on legislated crimes compared with that of the 1990s this article has relevance to those countries with an overcriminalizing trend for legislated crimes

the determinants of employee crime in the uk we present evidence on employee theft in the uk using data on actual recorded crime in a model where employees are rational cheaters whose theft decisions may also be influenced by individual characteristics we produce hypotheses about the role of labour market deterrence and individual influences on employee theft we then examine the role of these influences using regional crime data supplemented by data from the uk labour force survey and the home office our results provide information on employee theft as a particular type of crime on policy that may help to combat it and on alternative views of the motivation for crime

strong and weak ties in employment and crime this paper analyzes the interplay between social structure and information exchange in two competing activities crime and labor we consider a dynamic model in which individuals belong to mutually exclusive two person groups referred to as dyads there are multiple equilibria if jobs are badly paid and or crime is profitable unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities if instead jobs are well paid and or crime is not profitable unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities also in segregated neighborhoods characterized by high interactions between peers a policy only based on punishment and arrest will not be efficient in reducing crime it has to be accompanied by other types of policies that take into account social interactions

dividend taxes and firm valuation new evidence dividend taxes and firm valuation new evidence by alan j auerbach and kevin a hassett the jobs and growth tax relief act of 2003 jgtra03 reduced the tax rates on dividends with the highest statutory tax rate of 35 percent falling to 15 percent an interesting twist on the dividend tax cut was its temporary nature the provision as passed was effective only through 2008 and as recent congressional deliberations have illustrated the extension its supporters envisioned was by no means certain this large dividend tax reduction along with its sunset provision offers an unusual natural research experiment on the effects of dividend taxation the theory of dividend taxation suggests three possible scenarios for the effects of the dividend tax reduction under the tax irrelevance view the marginal shareholder is a tax free entity or a taxable investor who ignores or can offset incremental taxes and the dividend tax reduction has no effect on equity values or firm behavior under the traditional view the marginal source of equity finance is new share issuance and the tax reduction feeds through to the firm s user cost and stimulates extra capital formation share values rise in the short run but after full adjustment the higher capital level reduces the marginal revenue product of capital enough to offset the dividend tax reduction leaving equity prices the same under the new view the marginal source of finance is retained earnings and the dividend tax cut is capitalized into the share price of the firm but has no investment effect understanding the economic consequences of the dividend tax reduction requires knowledge of the empirical relevance of these competing views our previous paper auerbach and hassett 2005 performed an event study analysis of a large panel of firms to determine how firm attributes affected the valuation response over eight key event dates leading up to the 2003 legislation our results taken together rejected outright

crime and economic incentives we explore the role that economic incentives particularly changes in wages at the bottom end of the wage distribution play in determining crime rates we use data on the police force areas of england and wales between 1975 and 1996 and find relative falls in the wages of low wage workers lead to increases in crime we carry out a number of experiments with different wage measures including a wage measure that accounts for the effects of changes in the composition of employment these reinforce the picture of a strong association between the low wage labor market and crime the result that incentives play a central role is reinforced further by the strong impact on crime of deterrence measures and of a measure of the returns to crime

criminal deterrence revisiting the issue with a birth cohort we estimate the general deterrent effect of criminal justice resources on criminal behavior using panel data for a sample representative of young men in u s urban areas our data which combine individual level information on arrests and personal characteristics with aggregate information on criminal justice resources allow us to obtain deterrence measures that reflect theoretical concepts and are of potential policy relevance we find robust evidence of a general deterrent effect flowing from criminal justice particularly police resources the nature of our data also allows us to conduct extensive exogeneity tests and to explore a number of possible third causes for the deterrent effect we find strong evidence that our deterrence variables are exogenous and no evidence that our deterrence result stems from commonly hypothesized third causes copyright 1994 by mit press

persistent commodity shocks and transitory crime effects abstract this paper studies the dynamic response of crime to a positive income shock we estimate the short and medium run effects that an increase in copper price had on the local economy and on criminal activity in chile which is the world s leading copper producer after a decade of high prices mining municipalities did not exhibit lower crime rates compared to non mining municipalities to explain this counterintuitive result we investigated heterogeneous dynamic effects and observed that property crimes decreased only at the beginning of the boom as the dynamics of unskilled employment are consistent with the crime cycle we argue that crime evolves due to temporary labor market adjustments

market wages and youth crime to study the problem of widespread youth crime i analyze a timeallocation model in which consumers face parametric wages and diminishing marginal returns to crime the theory motivates an econometric model that i estimate using data from the national longitudinal survey of youth my estimates suggest that youth behavior is responsive to price incentives and that falling real wages may have been an important determinant of rising youth crime during the 1970s and 1980s moreover wage differentials explain a substantial component of both the racial differential in criminal participation and the age distribution of crime

changes in corporate effective tax rates over the past 25 years abstract we investigate systematic changes in corporate effective tax rates over the past 25 years and find that effective tax rates have decreased significantly contrary to conventional wisdom the decline in effective tax rates is not concentrated in multinational firms effective tax rates have declined at approximately the same rate for both multinational and domestic firms moreover within multinational firms both foreign and domestic effective rates have decreased finally changes in firm characteristics and declining foreign statutory tax rates explain little of the overall decrease in effective rates

the changing returns to crime do criminals respond to prices to what extent does crime follow the pattern of potential gains to illegal activity this article presents evidence on how criminals respond to this key incentive by reporting crime price elasticities estimated from a comprehensive crime dataset containing detailed information on stolen items for london between 2002 and 2012 evidence of significant positive crime price elasticities are shown for a panel of 44 consumer goods and for commodity related goods jewellery fuel and metal crimes the reported evidence indicates that potential gains are a major empirical driver of criminal activity and a crucial part of the economic model of crime the changing structure of goods prices helps to explain over 10 15 of the observed fall in property crime across all goods categories and the majority of the sharp increases in the commodity related goods observed between 2002 and 2012

the effect of education on crime evidence from prison inmates arrests and self reports we estimate the effect of high school graduation on participation in criminal activity accounting for endogeneity of schooling we begin by analyzing the effect of high school graduation on incarceration using census data instrumental variable estimates using changes in state compulsory attendance laws as an instrument for high school graduation uncover a significant reduction in incarceration for both blacks and whites when estimating the impact of high school graduation only ols and iv estimators estimate different weighted sums of the impact of each schooling progression on the probability of incarceration we clarify the relationship between ols and iv estimates and show that the weights placed on the impact of each schooling progression can explain differences in the estimates overall the estimates suggest that completing high school reduces the probability of incarceration by about 76 percentage points for whites and 3 4 percentage points for blacks we corroborate these findings using fbi data on arrests that distinguish among different types of crimes the biggest impacts of graduation are associated with murder assault and motor vehicle theft we also examine the effect of drop out on self reported crime in the nlsy and find that our estimates for imprisonment and arrest are caused by changes in criminal behavior and not educational differences in the probability of arrest or incarceration conditional on crime we estimate that the externality of education is about 14 26 of the private return to schooling suggesting that a significant part of the social return to education comes in the form of externalities from crime reduction

partisan impacts on the economy evidence from prediction markets and close elections analyses of the effects of election outcomes on the economy have been hampered by the problem that economic outcomes also influence elections we sidestep these problems by analyzing movements in economic indicators caused by clearly exogenous changes in expectations about the likely winner during election day analyzing high frequency financial fluctuations following the release of flawed exit poll data on election day 2004 and then during the vote count we find that markets anticipated higher equity prices interest rates and oil prices and a stronger dollar under a george w bush presidency than under john kerry a similar republican democrat differential was also observed for the 2000 bush gore contest prediction market based analyses of all presidential elections since 1880 also reveal a similar pattern of partisan impacts suggesting that electing a republican president raises equity valuations by 2 3 percent and that since ronald reagan republican presidents have tended to raise bond yields

crime and conspicuous consumption we study how property crime distorts consumption decisions using an incomplete information model we argue that consuming conspicuous goods reveals information to criminals seeking bountiful victims and increases the likelihood of being victimized thus property crime reduces the consumption of visible goods even when these cannot be directly stolen but simply carry information about a potential victim s wealth we exploit the large decline in property crime in the u s during the 90s to test this mechanism using data from the u s consumer expenditure survey from 1986 to 2003 we find that households located in states experiencing sharper reductions in property crime increased significantly their consumption of visible goods even when these goods are not generally stolen both in absolute terms and relative to other consumption goods our findings hold when we instrument the decline in property crime during the 90s using a variety of strategies

the risks and rewards of criminal activity a comprehensive test of criminal deterrence whereas previous analyses of criminal deterrence have focused on the effect of criminal enforcement on crime rates this study analyzes the existence of compensating differentials for criminal pursuits by analyzing the risk rewards trade off this approach represents a more comprehensive test of the criminal deterrence hypothesis the sample consisted of black inner city youths who reported their crime participation crime income and self assessed risks from crime the risk premiums for the three principal adverse outcomes arrest conviction and prison constituted between one half and two thirds of all crime income on the average providing strong support for the criminal deterrence hypothesis

political event portfolios abstract we use data from betting markets to analyze the sensitivity of stock returns to potential outcomes of political events such as elections by classifying stocks into expected conditional winners and losers prior to such an event we form portfolios that generate large positive returns after the event date conditional on correctly anticipating the outcome the approach is illustrated using data from the 2016 us presidential election and the 2016 brexit referendum we show that these sensitivities contain information about event related returns beyond that of firm characteristics whose predictive power has been documented in the literature

blind to carbon risk an analysis of stock market reaction to the paris agreement abstract it is increasingly recognized that a transition to sustainable finance is crucial to scale up the low carbon investments needed to achieve the global climate targets a main barrier to portfolios decarbonization is the lack of conclusive evidence on whether low carbon investments add value to a portfolio and on whether markets react to climate announcements by rewarding penalizing low carbon carbon intensive assets to fill this gap we develop an empirical analysis of the low carbon and carbon intensive indices for the eu us and global stock markets we test if financial markets are pricing the paris agreement pa by decreasing increasing the systematic risk and increasing decreasing the portfolio weights of low carbon carbon intensive indices afterwards we find that after the pa the correlation among low carbon and carbon intensive indices drops the overall systematic risk for the low carbon indices decreases consistently while stock markets reaction is mild for most carbon intensive indices moreover the weight of the low carbon indices within an optimal portfolio tends to increase after the pa this evidence suggests that stock market investors have started to consider low carbon assets as an appealing investment opportunity after the pa but have not penalized yet carbon intensive assets

real effects of accounting rules evidence from multinational firms investment location and profit repatriation decisions we analyze survey responses from nearly 600 tax executives to better understand corporate decisions about real investment location and profit repatriation our evidence indicates that avoiding financial accounting income tax expense is as important as avoiding cash income taxes when corporations decide where to locate operations and whether to repatriate foreign earnings this result is important in light of the recent research about whether financial accounting affects investment and in light of the decades of research on foreign investment that examines the role of cash income taxes but heretofore has not investigated the importance of financial reporting effects our analysis suggests that financial reporting is an important factor to be considered in the policy debates focused on bringing investment to the united states