an econometric study of illegal electricity connections in the urban favelas of belo horizonte brazil abstract the data from the project conviver launched in 2006 in belo horizonte brazil provides a unique opportunity to study illegal electricity connections based on an original dataset of 15 279 low income households this paper studies the incidence and determinants of illegality in the context of low income urban favelas the probability of engaging in illegal behavior is explained not just by low income but by a combination of concurring factors sub standard energy provision and equipment inefficient incorrect use of domestic electric appliances and running an informal in house business these recurrent issues in the urban favelas aggravate a sense of exclusion from growth which is generally recognized as a trigger of illegality the impact of energy demand on energy related illegality is carefully analyzed and different empirical strategies adopted to circumvent some simultaneity problem between both decision processes the effectiveness of consumption based energy subsidies is also explored in spite of some contrary arguments in the literature in the context of peri urban slums such measures may exert a positive impact in mitigating illegal access and use of energy effectiveness will be enhanced by accompanying measures such as perceivable improvements of equipment metering and maintenance promotion of beneficiaries awareness of energy usage and energy saving behaviors

crime and poverty a search theoretic approach numerous studies document that criminal activity is positively related to unemployment and negatively related to educational attainment levels within given communities we study this phenomenon in the context of a search equilibrium model in which agents choose between formal employment and pursuing crimerelated activities theft prior to their occupational choices agents undertake costly schooling raising their productivity crime acts in essence as a tax on human capital by affecting the probability that a worker s earnings possessions are subsequently appropriated there are multiple equilibria high crime low levels of educational attainment long spells of unemployment and poverty are correlated across them

on the welfare effects of a duty free zone abstract the analysis extends and corrects the results of an earlier paper by hamada two problems are analyzed 1 how is location of production affected by opening up of a free zone taking into account different kinds of trade barriers and zones implications for production consumption and welfare in a number of different cases are analyzed 2 what are the effects of capital inflow either into the zone or into the host country our results show that both types of capital inflow diminish welfare and welfare diminishes comparatively more when imported into the zone repatriated income as well as its composition is explicitly incorporated

the aftermath of financial crises a look on human and social wellbeing summary alongside its detrimental macroeconomics impacts financial crises can have substantial negative consequences on human and social wellbeing employing a cross country dataset on more than 100 banking and or currency crises during 1981 2007 this work examines the effects of financial crises on indicators of human and social wellbeing through employing an event study analysis the findings of this analysis suggest that the aftermaths of financial crises are characterized by increases in the growth rates of suicide rates crime rates and income inequality rates relative to their pre crisis trajectories additionally declines in the growth rates of health and educational expenditures government welfare expenditures and food quality and quantity intakes are common during periods immediately following financial crises such deteriorations are observed across different countries with income levels and also for crises that are and are not accompanied by recessions on average though human and social indicators are hit harder during financial crisis events accompanied by recessions this is especially true for crises in low and middle income economies in comparison to those in high income countries as a result not only are financial crises directly responsible for more rapid increases in income inequality within countries they may also be responsible for increasing inequalities of income security health nutrition and educational outcomes between richer and poorer countries needless to say deteriorations in many of these fronts are often associated with persistent or permanent losses in human and social wellbeing and cannot be assumed to be simply and immediately reversed with an economic recovery therefore the paper calls on the need for more concerted effort on the part of the policymakers to actively protect human and social outcomes during financial crises rather than trying to address such losses in the aftermath of crises because some of these losses are simply not recoverable

income distribution police expenditures and crime a political economy perspective in this paper i present a structural approach to investigate empirically the relation between income distribution police expenditures and crime the approach is based on the estimation of an equilibrium model where heterogeneous individuals choose whether to engage in criminal activities and expenditures on police to apprehend criminals are determined endogenously through majority voting i discuss the identification and estimation of the parameters of the structural model using data for the united states jel d72 d78 k42

on the choice between capital import and labor export abstract the paper analyses some questions arising in connection with inflow of foreign capital into a host country and its free zone when capital is mobile between sectors capital import into any part of the economy decreases welfare with sector specific capital import of capital into the protected sector export sector decreases increases welfare if capital import into the export sector of the domestic zone is infeasible there may be a case for establishing a free zone and allowing capital import exclusively there with a suitable tax policy capital import into the free zone will always be beneficial

inequality and violent crime abstract we investigate the robustness and causality of the link between income inequality and violent crime across countries first we study the correlation between the gini index and homicide and robbery rates within and between countries second we examine the partial correlation by considering other crime determinants third we control for the endogeneity of inequality by isolating its exogenous impact on these crime rates fourth we control for measurement error in crime rates by modeling it as both unobserved country effects and random noise finally we examine the robustness of this partial correlation to alternative measures of inequality the panel data consist of nonoverlapping 5 year averages for 39 countries during 1965 95 for homicides and 37 countries during 1970 94 for robberies crime rates and inequality are positively correlated within countries and particularly between countries and this correlation reflects causation from inequality to crime rates even after controlling for ot

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

earthquake fatalities the interaction of nature and political economy to say that the level of fatalities resulting from an earthquake is inversely related to a country s per capita level of income is hardly novel what makes our approach novel is that we relate fatalities to both per capita income and the level of inequality that exists within a country through their joint impact on the likelihood of collective action being taken to mitigate the destructive potential of quakes we first develop a theoretical model which offers an explanation as to why in some environments different segments of society prove incapable of arriving at what all parties perceive to be an agreeable distribution of the burden of the necessary collective action causing the relatively wealthy simply to self insure against the disaster while leaving the relatively poor to its mercy following this we test our theoretical model by evaluating 269 large earthquakes occurring worldwide between 1960 and 2002 taking into account other factors that influence a quake s destructiveness such as its magnitude depth and proximity to population centers using a negative binomial estimation strategy with both random and fixed estimators we find strong evidence of the theoretical model s predictions that is while earthquakes themselves are natural phenomena beyond the reach of humankind our collective inaction with respect to items like the creation and enforcement of building codes failure to retrofit structures and to enact quake sensitive zoning clearly plays a part in determining the actual toll that a given quake takes and it is through these and other examples of collective inaction that limited per capita income and inequality couple together with a given quake s natural destructive power in determining the actual fatalities resulting from a quake

international factor movements repatriation and welfare abstract this paper analyzes two different ways of allowing foreign capital inflow introducing it into the domestic economy and introducing it into a duty free zone it shows how the ranking of the two policies depends on the production patterns in the duty free zone and the rules of factor income repatriation the result can be used to explain the discrepancy between the rankings of these policies in two recent papers the analysis also shows how the way of repatriating factor income could affect the equilibrium of factor movement the welfare of the factor owners and the welfare of the countries concerned

the hazards of moral hazard comment on goff shughart and tollison i introduction in a recent study golf shughart and tollison 1997 demonstrate that the adoption of the designated hitter rule in the american league is associated with a sharp increase in the number of hit batsmen these authors suggest an intriguing economic explanation for this empirical regularity since pitchers in the american league no longer have to bat and risk being hit by pitches themselves they do not face the full cost of their actions when hitting opposing batters leading to a classic moral hazard problem it is important to note however that the reduced form empirical strategy used by those authors has no power to distinguish between such a moral hazard story and other competing explanations foremost among the other explanations is a simple compositional change in the type of batter faced pitchers are by and large very poor hitters making the marginal cost of a hit batsmen when a pitcher is at the plate high relative to that of other batters consequently pitchers are only roughly one third as likely to be hit by a pitch as are other batters with the adoption of the designated hitter rule pitchers are replaced at the plate by designated hitters who are far more effective batters and therefore more likely to be hit batsmen thus even if there is no change in the rate at which any batter of a given skill level is a hit batsmen i e no change in behavior on the part of pitchers the number of hit batsmen will rise when the designated hitter rule is put into effect using data from 1993 1996 i demonstrate in this paper that compositional effects alone explain over 80 of the observed cross league difference in hit batsmen in my sample excluding pitchers national league batters are hit by a pitch once every 115 4 at bats and american league batters are hit every 114 5 at bats suggesting little if any moral hazard once compositional differences are eliminated in fairness to goff et al however it should be stressed that the observed gap in hit batsmen between the leagues is smaller in my sample than in theirs so that it is unlikely that compositional effects alone can explain their entire finding 1 a number of other factors however further call into question the plausibility of the moral hazard argument first the very low rate of pitchers being hit by pitched balls when at the plate implies that only rarely are pitchers actually punished for hitting an opposing batter even if it were the case that every instance of a pitcher being hit by a pitch was retribution tabular data for table i omitted only one in 50 times would a pitcher be punished for hitting an opposing batsmen second there does not appear to be any correlation between the frequency with which pitchers hit opposing batsmen and the likelihood that the pitcher will himself be hit while at the plate if retaliation is the motivation for hitting pitchers when at bat as predicted by the moral hazard model then there should be a positive correlation between those two variables ii further exploration of the moral hazard argument table i presents relevant data by league for the years 1993 1996 in addition national league batting statistics are broken down into pitchers and non pitchers the first four columns provide aggregate totals the last three columns normalize by at bats for easier comparisons a number of important points emerge from table i first comparing american league and national league totals the elevated rate of hit batsmen in the american league demonstrated by goff shughart and tollison 1997 for the period up until 1990 is also present in the more recent data used here american league batters are hit an additional 131 times over the four year period 2 normalized by at bats american league batters are 5 more likely to be hit by pitches the difference between the leagues is somewhat smaller than that observed by goff et al in the earlier period roughly 50 additional hit batsmen per year

is an enclave sector a cure for unemployment in ldcs abstract in the framework of a simple general equilibrium model this paper demonstrates that the establishment of an enclave sector through foreign capital inflow does not always reduce employment in a labor surplus developing economy we point out a case where such capital inflows paradoxically accentuate the problem of unemployment in the host economy

the gains from duty free zones abstract duty free zones have been established in many countries and duty free shops can be found in every major international airport this paper investigates their welfare effect in the tradition of the pareto gains from trade literature using the dual approach developed in dixit and norman 1980 we show that the introduction of a duty free zone leads to pareto gains over autarky compared to free trade its welfare impact depends on the redistribution mechanism accompanying free trade we show that with a dixit norman tax scheme free trade is pareto inferior to a duty free zone regime the opposite holds true for lump sum redistribution

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

using electoral cycles in police hiring to estimate the effect of police on crime comment previous empirical studies have uncovered little evidence that police reduce crime possibly due to simultaneity problems this paper uses the timing of mayoral and gubernatorial elections as an instrumental variable to identify a causal effect of police on crime increases in the size of police forces are shown to be disproportionately concentrated in mayoral and gubernatorial election years increases in police are shown to substantially reduce violent crime but have a smaller impact on property crime the null hypothesis that the marginal social benefit of reduced crime equals the costs of hiring additional police cannot be rejected

mixed markets and crime abstract this paper specifies and solves a two stage game theoretic model of a mixed market for crime control in the first stage of the model private targets and the government choose levels of policing in the second stage criminals choose targets and the severity of the crimes that they commit the paper s key results are as follows first private policing can both divert crime to targets that lack private protection and also increase the severity of the crime that these less protected targets suffer second an increase in private policing reduces the aggregate expenditure on traditional policing this is an instance of a political incentive externality where private policing affects the objective function of the government specifically it reduces the level of traditional policing that is consistent with the samuelson condition for efficient provision of a public good third the substitution of private for public policing carries with it a change in the technology of policing in effect private policing leads to a shift from enforcement and punishment towards monitoring and target hardening this in turn may lead to an increase in the severity of crime fourth the mixed policing equilibrium is inefficient and in some situations mixing may reduce the utility of all targets

help wanted economists crime and public policy beginning with gary w becker s 1968 article on crime and punishment economists have contributed important theoretical insights and empirical findings to the study of criminal behavior but the influence of economists on crime relevant research and over policy debates remains negligible this essay summarizes some basic data on the causes of crime the social costs and benefits of incarceration and replenishing social capital work on crime by economists should become influential in setting research agendas and shaping policy debates but economists will have to roll up their sleeves complexify their models and confront a real world prisoner s dilemma or two

moral hazard and the effects of the designated hitter rule revisited i introduction in a recent paper in this journal we goff shughart and tollison 1997 hypothesized that the introduction of the designated hitter dh rule in the american league but not the national league of major league baseball in 1973 created the potential for a classic moral hazard problem because they are no longer required to appear at the plate american league pitchers can throw at opposing hitters with greater impunity i e at a lower cost than national league pitchers who still must take their turns at bat the economic theory of moral hazard clearly predicts that more batters will be hit by pitches in the american league than in the national league under such circumstances an implication that was supported by our empirical evidence which covered the period running from the birth of the american league in 1901 through the end of the 1990 pennant campaign after controlling for other relevant factors we found that american league batters had been plunked at rates 10 to 15 higher than their national league counterparts in the typical regular baseball season since the dh rule went into effect two comments published in this issue raise questions about the empirical magnitude of the dh effect and cast doubt on our interpretation of the evidence in particular relying on post 1990 data unavailable to us at the time our paper was in press levitt 1998 and trandel white and klein 1998 suggest that the differences in the rates at which batters are hit by pitches in baseball s two major leagues may no longer be statistically significant and moreover to the extent that they are that these differences are better explained by post 1973 changes in the composition of american league batters than by the dh rule s effects on pitchers own costs and benefits of throwing at opposing hitters levitt and trandel white and klein contend that the number of batters hit by pitches rose in the american league after 1973 not because pitchers had less to fear from retaliation directed against them personally but because the substitution of hard hitting dhs for weak hitting pitchers made beanball more profitable al team managers had more to gain from placing designated hitters on base by instructing pitchers to plunk them than from giving free passes to pitchers who otherwise represent easy outs in what follows we explore the implications of this alternative hypothesis more fully because better hitting in the american league does not explain inter league differences in hit batsmen prior to 1990 and because the dh rule continues to be a significant determinant of inter league differences in hit batsmen after 1990 once exogenous events in the national league are taken into account we conclude that our original interpretation of the empirical evidence stands ii what happened in the 1990s two stylized facts lead trandel white and klein to conclude that moral hazard explains little if any of the observed differences in hit batsmen between the american and national leagues one is that when our post world war ii subsample is expanded by adding data from regular season games played through august 31 1997 at most only about 3 of the lower rate of hit batsmen in the national league can be attributed to the american league s adoption of the dh rule in 1973 1 the other is that while consistent with our results american league batters were in fact hit by pitches 12 more frequently over the 1947 1990 period this empirical regularity can be explained better by inter league differences in the composition of batters in particular trandel white and klein suggest that the evidence supports the following statement to the extent that american league batters are on average more likely to be hit by pitches than are national league batters the difference is largely because the al batters are on average better hitters and are thus less costly and more beneficial to hit p

locational choice for free trade zones a comment abstract in this comment we derive conditions under which there are no equilibria for the models investigated by miyagiwa 1993

the sopranos redux the empirical economics of waste crime almer c and goeschl t the sopranos redux the empirical economics of waste crime regional studies evidence for the argument that enforcement makes environmental policies effective is limited with respect to geography scope enforcement tools and regulatory context non us evidence on criminal enforcement of illegal waste disposal is examined using a panel dataset of 44 counties from the german state of baden wurttemberg for the period 1995 2005 the results support the pro enforcement argument cumulatively there is clear evidence for a general deterrence effect of enforcement intensity on the amount of waste crime however regional economic and political economy factors matter significantly for environmental outcomes violations appear to be treated differently depending on their local political economy context

capital and technology movements and economic welfare economists have long valued capital mobility as an aid to international efficiency robert mundell has shown that under certain conditions the capital movement induced by tariffs on goods will substitute for trade and enable the tariff impeded international economy to reach essentially the same equilibrium as would a completely free international economy it will also except possibly for the case when the optimal tariff is non zero benefit both countries but if perfect unlimited capital mobility is a good thing for the borrowing country it does not follow as this paper demonstrates that any limited amount of capital mobility however small is a good thing if the capital movement is due to discrepancies in returns due solely to a tariff then a small amount of capital inflow will actually diminish welfare in the recipient country thus countries which take a few cautious steps toward liberalization of capital flow may find their welfare diminished this conclusion is related to the intuitive notion that perhaps it might not be a good idea to allow only a few foreign investors to reap high rates of return in capital short countries if foreign investment is allowed enough should be allowed to depress the rate of return so that excessive profits are not taken otut of the country by a few privileged investors on the other hand however this paper shows that if differences in returns are due to a technological advantage in the capital importing country so that the country with initially high return to capital nonetheless exports the capital intensive good and if these differences in returns are accompanied but not caused by tariffs then even short hesitant steps toward liberalization of capital inflow will improve the borrowing country s welfare this paper also shows that the home country s welfare may be improved or diminished by importing the advanced country s technology when the home country levies a tariff and pays royalties for the technology the critical point is that a movement of technology may either increase or diminish economic welfare depending on whether the technological progress is of the capital saving type or of the labor saving type in the fixed production coefficients case in the same case when the technological progress is hicksian neutral technology inflow will reduce or have no effect on the home country s economic welfare depending on whether the foreign country s technological progress occurs in the home country s inmport competing or export industries similarly capital or technology inflow will never increase the borrowing country s welfare when the country specializes completely in a single industry some of these results should be modified when we treat the possibility that changes in factor prices alter factor proportions

crime and local inequality in south africa the authors examine the effects of local inequality on property and violent crime in south africa their findings are consistent with economic theories relating inequality to property crime and also with sociological theories that imply that inequality leads to crime in general burglary rates are 20 30 percent higher in police station jurisdictions that are the wealthiest among their neighbors suggesting that criminals travel to neighborhoods where the expected returns from burglary are highest the authors do not find evidence that inequality between racial groups fosters interpersonal conflict at the local level

crime and victimization an economic perspective the recent upward trend in crime rates of developing countries has spurred widespread public concern about personal and proprietary insecurity in some countries the questions of crime violence and victimization are attracting more attention from academics and policy makers than traditional economic problems the objective of this paper is to examine the main issues related to crime and victimization from an economic perspective for this purpose the paper combines a review of the main results established in the literature with original research on the causes of crime and the risk factors of victimization the first section provides a review of the estimates of the costs of crime the main theoretical and empirical research on its causes and the relative advantages of official and survey data on crime the second section presents original work on the main causes of violent crime from a cross country perspective the empirical work starts with a basic model of the economic determinants of homicide and robbery rates in turn this empirical model is extended along five dimensions 1 deterrence factors 2 illegal drug related activities 3 demographic issues 4 income and ethnic polarization and 5 social capital the third section reviews recent case studies of latin american cities that rely on survey data to assess the empirical determinants of the probability of victimization these studies focus on three types of risk factors 1 individual characteristics 2 household characteristics and 3 community characteristics the main conclusions from the previous sections are summarized in section four

racial integration as an innovation empirical evidence from sports leagues this paper treats racial integration as an innovation in economic process in which economic entities find it advantageous to utilize potentially more productive inputs previously unavailable due to law custom or managerial discretion data on the racial integration of major league baseball and atlantic coast conference basketball are employed to address this issue the central question examined is which type of team integrated first losers or winners the results strongly support the idea that entrepreneurship trumps competitive rivalry that is winning teams led the process of racial integration jel li j7 one of the watershed events in u s history is the struggle to achieve a racially integrated society while the civil rights laws and court rulings in the 195o s 196o s and 197o s are among the major changes in public policy that gradually led to a breakdown of jim crow rule in the american south other changes in law and custom also motivated the process of racial integration across time and place indeed segregation was not limited to the south but was a prominent feature of many national organizations and markets despite the extensive commentary on these events from various perspectives there has been very little economic analysis of the actual process of racial integration economists have focused their efforts on the economics of discriminatio n while the actual process by which individuals firms and

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

on the political economy of income redistribution and crime this article analyzes a general equilibrium model in which agents choose to specialize in either legitimate or criminal activities expenditures on police to apprehend criminals as well as income redistribution are determined endogenously through majority voting we investigate how crime redistribution and police expenditures depend on characteristics of the underlying distribution of income earning abilities and on the apprehension technology our model accounts for the positive correlation between inequality and crime the positive correlation between expenditures on police and redistribution and the lack of correlation between crime and redistribution observed in u s data

empirical determinants of purchasing power parity deviations abstract this paper investigates the empirical determinants of purchasing power parity ppp deviations over the recent period of flexible exchange rates transitory ppp deviations arise in a world in which prices are sticky but where exchange rates respond instantaneously to news permanent ppp deviations occur when price indices differ across countries and the world is subject to real shocks regressions consistent with the hypothesis that current exchange rate changes create immediate ppp deviations which are slowly dissipated but not eliminated imply that both sticky prices and real shocks are responsible for the recent failure of ppp

offensive performance omitted variables and the value of speed in baseball abstract this paper critiques from an economic perspective published results on the value of base stealing in baseball augmenting previous specifications for the production function for runs parallels the control a simulation study imposed on teams overall footspeed recovering economically sensible results

the power of money wealth effects in contests abstract the relationship between wealth and power has long been debated nevertheless this relationship has been rarely studied in a strategic game in this paper we study wealth effects in a strategic contest game two opposing effects arise wealth reduces the marginal cost of effort but it also reduces the marginal benefit of winning the contest we consider three types of contests which vary depending on whether rents and efforts are commensurable with wealth our theoretical analysis shows that the effects of wealth are strongly contest dependent it thus does not support general claims that the rich lobby more or that low economic growth and wealth inequality spur conflicts

incentive and incarceration effects in a general equilibrium model of crime an intertemporal general equilibrium model of criminal behavior is used to analyze the effect on crime of changing policy parameters the policy parameters are the length of the prison term the severity of punishment and the amount of police resources the number of crimes in society can be decomposed into an incentive part an incarceration part and a crime competition part the magnitudes of these three components are studied by means of empirical data from england and the us

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

does social capital reduce crime abstract we investigate the effects of civic norms and associational networks on crime rates civic norms may attach guilt and shame to criminal behavior thus increasing its opportunity cost associational networks may increase returns to noncriminal activities and raise detection probabilities but they may also work as communication channels for criminals and may offer official cover to criminal activities the empirical assessment of these effects poses serious problems of endogeneity omitted variables measurement error and spatial correlation italy s great variance in social and economic characteristics its homogeneity in policies and institutions and the availability of historical data on social capital in its regions allow us to minimize the first two problems to tackle the last two problems we use report rate adjusted crime rates and estimate a spatial lag model we find that both civic norms and associational networks have a negative and significant effect on property crimes across italia

learning from the behavior of others conformity fads and informational cascades learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior for example why do people tend to converge on similar behavior why is mass behavior prone to error and fads the authors argue that the theory of observational learning and particularly of informational cascades has much to offer economics business strategy political science and the study of criminal behavior

the effect of prison population size on crime rates evidence from prison overcrowding litigation simultaneity between prisoner populations and crime rates makes it difficult to isolate the causal effect of changes in prison populations on crime to break that simultaneity this paper uses prison overcrowding litigation in a state as an instrument for changes in the prison population the resulting elasticities are two to three times greater than those of previous studies a one prisoner reduction is associated with an increase of fifteen index i crimes per year while calculations of the costs of crime are inherently uncertain it appears that the social benefits associated with crime reduction equal or exceed the social costs of incarceration for the marginal prisoner

the locational choice for free trade zones rural versus urban options abstract urban and rural areas are compared as appropriate locations for a free trade zone within a developing country suffering from urban unemployment if domestic capital is mobile between the two regions then the rural area is shown to be preferable to the urban area and sufficient conditions for this conclusion are presented this conclusion may be reversed however if capital is sector specific the condition for this reversal is also discussed

batter up moral hazard and the effects of the designated hitter rule on hit batsmen i introduction despite its relatively recent appearance in the literature the theory of moral hazard has proved to be rich in empirical implications it has been applied fruitfully in a wide variety of settings including medical insurance property and casualty insurance labor contracts savings and loan failures and credit rationing 1 perhaps the most frequently cited application of this idea is sam peltzman s 1975 study of mandatory seat belt laws he reported evidence suggesting that drivers respond rationally to such laws which reduce the risk of injury or death in automobile accidents by driving more recklessly hence while mandatory seat belt laws have resulted in fewer automobile fatalities they have increased the number of non fatal accidents and accidents involving damage to property and pedestrians in this paper we argue that the introduction of the designated hitter dh rule in the american league but not the national league of major league baseball in 1973 created the potential for a classic moral hazard problem because they are not required to appear at the plate american league pitchers can throw at opposing hitters with greater impunity i e at a lower cost than national league pitchers who must take their turn at bat the economic theory of moral hazard clearly predicts that more batters will be hit in the american league under such circumstances an implication which is supported by the empirical evidence reported herein after controlling for other relevant factors we find that american league batters have been hit by pitches at rates 10 to 15 higher than their national league counterparts in the typical post dh rule season ii the simple economics of hitting batters we model pitchers as the ultimate decision makers with regard to behavior that leads to hit batters in making this assumption we ignore the principal agent relation between pitchers and managers as well as any externalities arising among players that may influence the number of batters hit by pitches managers sometimes instruct pitchers to throw at a batter presumably to cool off opponent s bats or to retaliate for opposing pitchers throwing at his team on occasion a pitcher may view his own personal interests in terms of runs and income as diverging from the manager s interests so that he would not carry out such instructions to the letter 2 in any case a batter may be hit when the pitcher makes a deliberate attempt to do so or when the pitcher has not expended much effort to avoid hitting him while the distinction between the two causes of hit batsmen may be important in its own right we treat them as being observationally equivalent both amount to the pitcher altering the probability of hitting a batter by changing the intended location and speed of his pitches in our elementary approach a pitcher s decision to raise or lower this probability hinges on a marginal decision making calculus of weighing the expected benefits against the expected costs of hitting a batter these benefits and costs would ultimately affect the pitcher s expected utility by influencing his lifetime income and consumption possibilities his utility from the indulgence of personal preferences or both increasing the probability of hitting a batter can potentially benefit the pitcher in several ways hit batsmen may become more reluctant now and in future games to lean over the plate thereby reducing their effectiveness against pitches low and outside they may become more susceptible to being fooled by curve balls that give the illusion of being inside or they may dig in less and thereby reduce their power all of these effects lower the probability of runs being scored against the pitcher in present and future appearances additionally the pitcher may alter the probability of hitting batters in order to retaliate against similar tactics being used by opposing pitchers this may be a means of neutralizing an opponent s strategy of throwing at batters and hence help increase run production by the pitcher s own team

alcohol availability and crime evidence from census tract data 1 introduction this article uses census tract data from the city of detroit and a reduced form crime equation to investigate the effects of alcohol availability on crime a fact of urban life in the united states is high crime rates rates that differ across neighborhoods in cities and easy availability of alcohol a disproportionately large number of crimes are committed by people who have just consumed alcohol cook and moore 1993a the homicide rate among youths in poor inner cities where alcohol consumption tends to be high is four times as high as the national average among all youths fbi 1996 parker 1993 reports that all things equal homicides are higher in high alcohol consumption neighborhoods than in low alcohol consumption neighborhoods according to the national institute of criminal justice statistics 40 of all violent crime victimization 40 of all fatal motor vehicle accidents and 67 of all domestic violence in 1995 were alcohol related in addition 40 of all violent offenders in jail reported using alcohol just before committing the crime greenfeld 1998 similarly a disproportionately large share of crimes in the united kingdom occurs in or near pubs during peak hours of operation hutchinson henderson and davis 1995 besides being perpetrators a large number of victims of crime had used alcohol at the time of their victimization in this study i use the term commission of crime more broadly to include perpetrators as well as the victims of crime in spite of these statistics easy availability of alcohol and its use continue to be part of the american culture a harris poll reports that 38 of adult males think they drink too much but will not change their behavior and 28 of high school students think that adults should be able to drink all the alcohol they want fbi 1996 however a recent study conducted by the university of michigan for the national institute of drug abuse found that over 80 of americans disapprove of youth drinking university of michigan institute for social research 1998 in spite of these statistics linking alcohol to crime with the exception of the relationship between alcohol control policy and drunk driving economists have not investigated the effects of alcohol availability on crime rates generally given the high correlation between alcohol availability and crime dilulio 1995 suggests using zoning laws to decrease alcohol availability as a means of decreasing crime it is not clear whether there is a causal relationship between alcohol availability and crime rates does alcohol availability increase crime if increased alcohol availability leads to increased crime what is the mechanism through which alcohol availability affects crime while answers to these questions may be important for policy formulation and implementation my concern is with the investigation of the effects of alcohol availability on crime rates if alcohol availability increases crime rates it may be possible to formulate alcohol control policies that also depress crime while there are few theoretical models that link alcohol availability to specific crimes empirical studies of the effects of geographical availability of alcohol on crime rates generally are few and far between in the economics literature more empirical studies could help establish the link that has been made between alcohol control policies and crime results of studies investigating the connection between alcohol availability and crime have implications for further research and policy for example if alcohol availability increases crime rates then decreasing alcohol availability may decrease crime and improve social welfare if there is a positive link between alcohol availability and crime rates then alcohol availability should be included in the supply of offense equation as an added explanatory variable there is therefore the need to better understand the relationship between the geographical availability of alcohol and crime rates in the economics of crime literature

foreign capital and protectionism in terms of a simple model it is shown that the growth in the export processing zone through an influx of foreign owned capital reduces welfare for an economy importing capital intensive goods and following a protectionary policy similarly it follows that growth in the export processing zone should benefit economies importing labor intensive goods

gated communities and the economic geography of crime abstract this paper analyzes gated communities in a geographic model of crime there are four major results first gating always diverts crime to other communities but has an overall deterrent effect on crime as long as it does not impact legitimate employment opportunities second gating expenditures may be strategic substitutes or strategic complements the latter possibility may help explain why gated communities appear to spread like a contagion third the nash equilibrium level of gating expenditures is inefficiently large fourth gating may actually increase the overall level of crime if it either affects employment opportunities or it influences the selection among multiple equilibrium crime rates

economic growth and crime against small and medium sized enterprises in developing economies several studies have explored the relationship between economy level crime rates or individual level crime and economic growth however few studies have examined the relationship between economic growth and crime against firms this study uses data for about 12 000 firms in 27 developing countries and finds that economic growth is negatively associated with crime this relationship is stronger for small and medium firms than large firms the study also explores several economy wide factors and their influence on the growth crime relationship for small and medium enterprises the results are robust to various sensitivity checks

the effect of the designated hitter rule on hit batsmen pitcher s moral hazard or the team s cost benefit calculation a comment since the designated hitter dh rule was introduced to the american league al in 1973 american league pitchers have hit opposing batsmen more frequently than have national league nl pitchers golf shughart and tollison 1997 hereafter gst attribute this difference to moral hazard on the part of pitchers because american league pitchers no longer bat they do not personally face retaliation in kind for hitting opposing batsmen and hence can throw at opposing batters with greater impunity p 555 gst find that the introduction of the dh rule led to a 10 to 15 increase in hit batters in the american league relative to the national league p 558 and offer this increase as evidence consistent with the moral hazard story we question whether the dh rule has really made such a large difference and whether pitchers moral hazard is the best explanation for whatever difference it has made we offer a different explanation hit batsmen should occur more frequently in the al because from the team s point of view the net benefits of plunking a designated hitter are higher than those of plunking a pitcher our empirical evidence provided below also casts doubt on the gst result we find the moral hazard story questionable for the following reason a national league team that plunked the opposing pitcher in retaliation for his throwing at one of its players would be putting the opposing team s weakest hitter on base sacrificing a very likely out a less costly form of retaliation is to plunk the opponent s best hitter a batter far more likely to create runs for his team if pitched to normally retaliating against the big slugger is also likely to provide a greater benefit threatening the opponents with injury to a top hitter should provide a greater deterrent than threatening them with injury to an average pitcher if retaliation for a hit batsman is indeed directed at a team s big hitter then the fact that al pitchers no longer bat should have little if any effect on their willingness to hit opposing batters we believe it is common knowledge among students of the game that plunking a big slugger is in fact the standard retaliatory strategy 1 of course our a priori argument and casual empiricism are not conclusive in our explanation the pitcher acts as an agent of his team s manager so there is no particular deterrent value in plunking the pitcher but hitting the pitcher might make sense as a retaliatory second move strategy if instead as gst explicitly assume the pitcher himself can decide to throw at an opposing batter our cost benefit explanation for the interleague difference in hit batsmen implies that pitchers are plunked less often than are designated hitters 2 whereas the gst moral hazard explanation implies that pitchers who bat are objects of retaliation 3 support for the view that retaliation is seldom directed at pitchers is provided by james s 1987 annotated list of significant injuries resulting from hit batsmen 1950 1984 only three of 48 cases from regular season games in which a pitcher batted involved injury to a pitcher still we need to take a more detailed look at the data to examine the question when pitchers bat is it pitchers or non pitchers at whom retaliation is directed sampling of a number of years since introduction of the dh shows a pattern consistent with our cost benefit argument designated hitters typically good hitters because fielding skills are not required for their job are hit by pitches somewhat more frequently than are other batters while pitchers typically poor hitters because pitching skills are much more important to their job are hit much less frequently see appendix on average dhs in the al have been hit at about 110 the rate of other al batters since dhs get about 1 9 of al at bats this factor suggests that the total hit batsmen rate in the al should exceed the rate in the nl by about 1

us and them the origin of identity and its economic implications we investigate the origins of identity and the innate proclivity to draw a distinction between insiders and outsiders we propose an evolutionary explanation we argue that identity arises because it facilitates survival in an evolutionary setting we endogenize preferences and demonstrate that the evolutionarily stable preferences fashioned by natural selection would draw a distinction between insiders and outsiders we then work out the implications of such preferences in two contemporary scenarios one entailing rent seeking behavior and the other involving public good provision our results are in conformity with empirical evidence

winning isn t everything corruption in sumo wrestling although the theoretical literature on corruption is well developed empirical work in this area has lagged because it has proven difficult to isolate corrupt behavior in the data in this paper we look for evidence of corruption in an unlikely place the highest echelons of japanese sumo wrestling this paper provides strong statistical evidence documenting match rigging in sumo wrestling a non linearity in the incentive structure of promotion leads to gains from trade between wrestlers on the margin for achieving a winning record and their opponents we show that wrestlers win a disproportionate share of the matches when they are on the margin increased effort can not explain the findings winning on the bubble is more frequent when the two competitors have met often in the past success on the bubble tends to rise over the course of a wrestler s career but declines in his last year consistent with the game theoretic predictions wrestlers who are victorious when on the bubble lose more frequently than would be expected the next time they meet that opponent suggesting that part of the payment for throwing a match is future payment in kind systematic differences across wrestling stables suggest that the stables play a role in facilitating the corruption in times of increased media scrutiny the match rigging disappears this abstract was borrowed from another version of this item

violent crime and punishment an application of the lisrel model public anxiety over violent crime has forged a broad consensus to purchase more crime control recently the president brought into law a federal anti crime bill that will put an additional 100 000 police on the nation s streets this paper presents empirical evidence on the deterrence effect of police presence the principal finding is that police presence deters commission of violent crimes by increasing the risk of being punished for committing those crimes this risk is modelled as a latent variable because the probability and severity of punishment for committing a violent crime are generally communicated in an onconsistant fashion the violent crime commission rate is also treated as a latent variable because it is almost certainly afflicted with measurement error

a note on the stability of the harris todaro model with capital mobility the present note derives the exact stability condition for the harris todaro model with intersectoral capital mobility where land is explicitly included as a third scarce factor in agriculture while the previous study by neary states the difficulty of deriving a clear cut result in such a case this note demonstrates that if capital and land are never technologically substitutes in the agriculture production neary s condition that the urban sector is more capital abundant than the rural sector becomes a sufficient condition for local stability in an important article in this journal neary 1981 considered the stability of the harris todaro model with intersectoral capital mobility among other things neary showed that when relative commodity prices are fixed and capital and labour are subject to constant returns to scale in agriculture an unspecialized equilibrium is dynamically stable if and only if the urban sector is capital abundant relative to the rural sector however in the original work by harris and todaro 1970 the fixed availability of land is included in the agriculture production function hence strictly speaking the stability condition quoted above is not for the original harris todaro model with intersectoral capital mobility on this point neary concluded that the introduction of a third scarcefactor land in agriculture greatly complicates the analysis and makes it impossible to derive simple and clear cut results the present note argues that a definite result can be derived if the normality property of factors of production which was utilized by rader 1968 and suzuki 1985 is assumed

free trade zones with harris todaro unemployment a note on young miyagiwa abstract this paper attempts to generalise the young miyagiwa results for an economy with a free trade zone and harris todaro unemployment by incorporating intersectoral mobility of domestic capital and an upward sloping supply function of foreign capital our analysis reveals that under reasonable assumptions creating a free trade zone may lead to a loss in national welfare further there may arise a conflict between the twin objectives of increasing employment and increasing national welfare

behavioral foundations of microcredit experimental and survey evidence from rural india microcredit is an innovative financial tool designed to reduce poverty and fix credit market imperfections we use experimental measures of time discounting and risk aversion for villagers in south india to highlight behavioral features of microcredit conditional on borrowing from any source women with present biased preferences are more likely than others to borrow through microcredit institutions microcredit contracts require loan repayments in regular fixed installments and they harness peer pressure to encourage discipline these innovations mirror mechanisms highlighted in behavioral approaches to saving suggesting that microcredit s popularity stems partly from modes of encouragement and self discipline absent in typical lending mechanisms

stability of the mobile capital harris todaro model some further results a necessary and sufficient condition for stability is derived for the mobile capital harris todaro model of rural to urban migration in developing countries when land is a scarce factor in agriculture the stability condition when land is ignored that the urban sector comprising manufacturing industry and the urban unemployed be more capital abundant is no longer either necessary or sufficient for stability nevertheless this condition always enhances stability and it is sufficient though not necessary for stability in many circumstances e g when land is separable in production from labour and capital intuitive explanations of these conditions are provided excerpt

unemployment and the formation of duty free zones abstract a number of authors have suggested that the formation of a duty free zone may reduce the welfare of the host country their analyses assumed full employment for a country suffering unwemployment of the harris todaro type we show that the value of national output at world prices increases with the formation of a duty free zone which involves the reduction of tariffs on intermediate imports into the zone

intermediate goods and the formation of duty free zones abstract if a country forms a duty free zone by lowering tariffs on intermediate goods and taxes on foreign capital used in the zone then resources are attracted from the surrounding domestic zone this can worsen the effects of the distortions due to the tariffs remaining in the domestic zone and can lower the host country s national income and welfare this tends to occur if 1 there is less substitutability between the intermediate and labor than between these factors and capital 2 there is currently a small foreign owned sector in which the share of labor in total costs is large relative to the share of the imported intermediate in the foreign sector and relative to the share of labor in total costs in the domestic zone ironically under the latter circumstances the host country is likely to regard a duty free zone as an attractive option

a reconsideration of the welfare economics of a free trade zone abstract this paper presents a model of a free trade zone which incorporates the fact that such zones are often established by government subsidies designed to promote non traditional exports in our model the condition is derived under which the establishment of a free trade zone can increase welfare regardless of the relative factor intensity of a zone based industry however the relative factor intensity of a free trade zone plays a crucial role in determining the change in welfare following economic growth and foreign investment

unemployment and foreign capital the relative opportunity costs of domestic labour and welfare the consequences of increased foreign capital for an economy with unemployment are analyzed under different assumptions that influence the relative oportunity costs of domestic labor the investigation suggests that the implications of the literature on the welfare effect of increased foreign capital are misleading the paper shows that welfare gains result from increased foreign capital if the opportunity costs of labor are sufficiently low relative to the wages earned by laborers employed by new foreign capital a number of cases where this occurs are presented the findings of the paper suggest that cases where increased foreign capital must be welfare harming represent extreme parameterizations in the set of possibilities copyright 1991 by the london school of economics and political science

what causes violent crime this study uses panel data of intentional homicide and robbery rates for a sample of developed and developing countries for the period 1970 1994 based on information from the united nations world crime surveys to analyze the determinants of national crime rates both across countries and over time a simple model of the incentives to commit crimes is proposed which explicitly considers possible causes of the persistence of crime over time criminal inertia a panel data based gmm methodology is used to estimate a dynamic model of national crime rates this estimator controls for unobserved country speci ce ects the joint endogeneity of some of the explanatory variables and the existence of some types of measurement errors a icting the crime data the results showthat increases in income inequality raise crime rates crime tends to be countercyclical and criminal inertia is signi cant 2002 elsevier science b v all rights reserved

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

war signals a theory of trade trust and conflict we construct a dynamic theory of civil conflict hinging on inter ethnic trust and trade the model economy is inhabitated by two ethnic groups inter ethnic trade requires imperfectly observed bilateral investments and one group has to form beliefs on the average propensity to trade of the other group since conflict disrupts trade the onset of a conflict signals that the aggressor has a low propensity to trade agents observe the history of conflicts and update their beliefs over time transmitting them to the next generation the theory bears a set of testable predictions first war is a stochastic process whose frequency depends on the state of endogenous beliefs second the probability of future conflicts increases after each conflict episode third accidental conflicts that do not reflect economic fundamentals can lead to a permanent breakdown of trust plunging a society into a vicious cycle of recurrent conflicts a war trap the incidence of conflict can be reduced by policies abating cultural barriers fostering inter ethnic trade and human capital and shifting beliefs coercive peace policies such as peacekeeping forces or externally imposed regime changes have instead no persistent effects

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

transaction costs risk aversion and the choice of contractual arrangements publisher summary this chapter discusses transaction costs risk aversion and the choice of contractual arrangements every transaction involves a contract and the transactions conducted in the marketplace entail outright or partial transfers of property rights among individual contracting parties the contractual arrangements through which these transfers are negotiated are several and varied the chapter presents a theory that states that economic efficiency is the same under various land tenure arrangements subject to the constraint of private property rights although transaction costs exist in the real world the theory enables the understanding of much of the farming behavior however the presence of a variety of contractual arrangements under the same constraint of competition poses the question of the choice of these arrangements if a firm can increase efficiency in production by employing productive resources of more than one resource owner a contract to combine the resources will be obtained the formation of the contract involves partial transfers of property rights in one form or another such as leasing hiring or mortgaging

on the evolution of competitive balance the impact of an increasing global search the coase theorem maintains that where free market precepts exist the allocation of property rights does not impact the distribution of resources an application to major league baseball suggests that institutions such as free agency and the reverse order amateur draft would not impact player distributions and therefore would not impact competitive balance the present study finds that the distribution of wins is generally consistent with the precepts of the coase theorem and therefore suggests a course for those who wish to alter the level of competitive balance major league baseball should increase its focus on expanding the size of its labor pool jel o15 l83 c22

an empirical characterization of the dynamic effects of police spending on violent and property crime the study estimates the dynamic effects of shocks to police expenditures on measures of violent and property crime rates using annual u s state level data for the period 1960 2015 we employ a structural panel var model and achieve identification by imposing the restriction that police spending responds to structural shocks to crime with at least a lag of 1 year results indicate that a shock to police spending leads to a persistent and significant decreases in violent and property crime rates and b significant and persistent negative impacts on crime rates in periods of high crime but little impacts in periods of low crime variance decompositions show that shocks to police spending account for moderate to large proportions of the variability of u s state level crime rates our findings are robust across separate measures of violent and property crime rates as well as to the inclusion of additional variables to the baseline panel var model jel k42

export processing zones in madagascar a success story under threat summary the success of export processing zones or the zone franche in madagascar since 1990 is with the exception of mauritius an isolated and unknown case in africa this paper based on first hand data explains that the zone franche has had a highly significant macroeconomic impact in terms of exports and jobs we show that average wages in the zone franche are equivalent to the other formal activity sectors other things being equal and that labor standards there are higher than average the zone franche quickly recovered from the 2002 crisis and has benefited a great deal from agoa the final phase out of the multi fibre arrangement in 2005 is expected to have a negative impact on the zone franche

violent crime does social capital matter this paper examines empirically the effect of some commonly used indicators of social capital such as the prevalence of trust on community members and the participation in voluntary secular and religious organizations on the incidence of violent crimes this is a cross country study whose basic sample consists of 39 developed and developing countries and whose dependent variable is the national intentional homicide rate the paper identifies and deals with three challenges in the empirical estimation of the effect of social capital on the incidence of violent crimes the omittedvariable problem is dealt with by including income inequality and economic growth as additional determinants of a country s violent crime rate the joint endogeneity or reverse causation problem is accounted for by using instrumental variables for social capital in the crime regression the specificity problem that is the potentially opposite effects of group specific and society wide social capital is noted and addressed only indirectly by emphasizing the results applied to the social capital indicators that have application for society as a whole the main result of the paper is that only the component of social capital measured by trust on community members has the effect of reducing the incidence of violent crimes the results regarding measures of other indicators of social capital are rather unclear this may be due to a combination of limited samples inability to fully control for reverse causation and most likely the opposite effects that society wide and group specific social capital may have on violent crime lederman and menendez are economists with the office of the chief economist for latin america and the caribbean of the world bank loayza is a senior economist with the research department of the central bank of chile and he is currently on leave from the development economics research group of the world bank the opinions expressed herein should not be attributed to the world bank the authors are grateful to ed glaeser jeff grogger gale johnson sanjay marwah steve messner nicholas sambanis and an anonymous referee for invaluable comments and suggestions the authors are responsible for any remaining errors

on the harris todaro model with intersectoral capital mobility n b professor neary was based at trinity college dublin when this article was first published the full text of the article is not available in ora at this time citation neary j p 1981 on the harris todaro model with intersectoral capital mobility economica 48 191 219 234

why special economic zones using trade policy to discriminate across importers tariffs are generally assumed to depend on the product not the identity of the importer however special economic zones are a common economically important policy used worldwide to lower tariffs on selected goods for selected manufacturers i show this is motivated by policymakers desire to discriminate across buyers when a tax is intended to raise prices for sellers through a mechanism distinct from existing theories of optimal taxation using a new dataset compiled from public records and exogenous changes in imports of intermediate goods i find the form composition and size of us zones are consistent with the theory

unemployment and the optimal export processing zone abstract in a country with harris todaro unemployment the formation of an urban export processing zone reduces national income unless it raises rural wages in that case increases in zone wages increase national income by less than dollar for dollar if foreign capital is taxed optimally then intermediate imports into the zone should be subsidized while the wage should be at the minimum feasible level for a given tax policy either the wage should be at the minimum or the ad valorem tariff on the intermediate should exceed the inverse of the elasticity of supply of labor from the countryside existing zone policies depart from these prescriptions

the effects of labor markets and income inequality on crime evidence from panel data we estimate a model of crime using panel data for the u s we focus on the role of labor markets income distribution and demographics on property crime we find strong evidence that favorable labor market conditions have a significant negative effect on property crime we further test this result using sector specific wages and find that crime is most elastic with respect to wages in sectors that use low skilled labor we also find that income inequality has no significant effect on crime and that the proportion of young males in the population has a significant positive effect on crime

learning dynamics and support for economic reforms why good news can be bad support for economic reforms has often shown puzzling dynamics many reforms that began successfully lost public support this paper shows that learning dynamics can rationalize this paradox because the process of revealing reform outcomes is an example of sampling without replacement this concept challenges the conventional wisdom that one should begin by revealing reform winners it may also lead to situations in which reforms that enjoy both ex ante and ex post majority support will still not come to completion the framework can be used to explain why gradual reforms worked well in china where successes in special economic zones facilitated further reform whereas this was much less the case for latin american and central and eastern european countries

welfare spending and political conflict in latin america 1970 2010 abstract we study an age old question in political economy does government spending on welfare ensure peace this question was at the heart of the european welfare state model of the early 20th century and remains relevant today in face of rising inequalities and political conflict yet there is limited empirical evidence about this question we make use of a panel of 12 latin american countries over the period 1970 2010 to show that welfare spending has led to substantial reductions in conflict across the region this effect is more pronounced when associated with reductions in inequality and increasing social and institutional trust

crime and punishment in major league baseball the case of the designated hitter and hit batters i introduction are you seriously going to throw at somebody when you re facing randy johnson curt schilling 1 in 1973 amid waning fan interest in baseball the american league al of major league baseball mlb instituted the designated hitter rule as an experiment the stated goal of this rule change was to boost offensive output by increasing the talent pool of batters in the lineup traditionally the competing teams field nine players who must play defense in the field and bat because of the importance of the pitcher who is responsible for putting every ball in play teams rely on pitching ability and ignore the hitting ability when choosing the pitcher in the lineup therefore pitchers tend to be very poor hitters by allowing teams to substitute a player of greater hitting ability known as the designated hitter dh to bat for the pitcher the total offensive output increases the experiment has since grown into an institution in the al that differentiates it from the national league nl where all players must bat and play in the field the dh succeeded in turning the al into the power league as intended but an unintended consequence of the rule change is that the al now has more batters hit by pitches than the nl traditional baseball lore holds that the lack of retaliatory punishment in the al for hitting batters is the cause of this phenomenon veteran nl manager dusty baker describes the deterrent impact from a pitcher s point of view you can be bold in the american league and get away with hitting batters it s different in our league where you have to hit 2 pitchers who do not have to bat where they might face retaliation are more willing to risk hitting batters than pitchers who do bat given that the rules of the game in both leagues are identical except for the use of the dh mlb created ideal conditions for a natural experiment to examine the impact of the dh on hit batters in a controlled setting 3 several economists have looked at the issue and found that there is a statistically significant relationship between the dh and hit batters however the reason for this difference is subject to much debate it is possible for the hit batter differential to exist without the deterrent effect of retaliation the rulebook punishment for hitting a batter awarding the hit batter first base makes retaliatory enforcement costly for teams to employ pitchers are typically poor hitters who rarely reach base via hitting while batters who are dhs are typically good hitters the fewer hit batters in the nl may reflect the lineup composition in which the pitcher must bat nl teams will try to avoid plunking pitchers because they are relatively less likely to reach base than non pitchers while al teams do not have this easy out in their batting lineups a problem with previous studies of the subject is their reliance on yearly aggregate data hit batters are rare events approximately 1 of all plate appearances result in a hit batter that occur in the course of game where other incentives are quite relevant this means that identifying small changes in pitcher behavior from specific factors will be difficult to identify with aggregate data differentiating between the two competing explanations for the hit batter differential between leagues deterrence and lineup composition requires micro level data where we can control for in game strategic incentives for hitting batters using a unique play by play data set that allows us to control for specific factors that affect hit batters we find that pitchers are still more likely to hit batters with a dh in the lineup than without and though pitchers are hit more rarely than other players pitchers do experience retaliation for hitting batters retaliation against pitchers who plunk batters which was not found in earlier studies is needed to generate an effective deterrent for pitchers in the nl

do remittances diminish social violence abstractthis paper represents the first attempt to formalise the relationship between remittances and social violence by developing a model that predicts that migrants remittances lead to the reduction of social violence in the recipient economy under the condition that remittances increase the average product of labour using homicide data as an indicator of social violence we tested our model s prediction controlling for the endogeneity problem with appropriate instruments we found that remittances tend to reduce social violence we performed sensitivity analysis on remittances in the empirical specification and found it robust with an unchanged negative sign

pass or run an empirical test of the matching pennies game using data from the national football league this article examines play calling in the national football league nfl it finds that a mixed strategy equilibrium game explains nfl play calling better than standard optimization techniques when a quarterback is injured and replaced with a less capable backup standard optimization theory suggests that the offense will run more often passing less our game theoretic model predicts that the offense will not change its play calling because the defense will play against the run more often using every first half play from the 11 teams that had a starting quarterback miss action because of injury in the 2006 season we find that the injury did not alter the likelihood that the offense would pass we also find that coaches randomly mix passing and running plays as the mixed strategy games predict

poverty and crime in 19th century germany we estimate the impact of poverty on crime in 19th century bavaria germany rainfall is used as an instrumental variable for grain rye prices to address econometric identification problems in the existing literature the rye price was a major determinant of living standards during this period the rye price has a positive effect on property crime a one standard deviation increased property crime by 8 ols estimates are twice as large as instrumental variable estimates highlighting the value of our empirical approach higher rye prices lead to significantly less violent crime though and we argue that higher beer prices caused by the higher rye prices are a likely explanation

increasing returns and the evolution of violent crime the case of colombia abstract this paper presents an explanation of the recent escalation of violent crime in colombia the paper considers three implicit models that isolate different types of externalities among criminals in the first model criminals make crime more appealing to nearby residents by congesting the law enforcement system and hence lowering the probability of punishment in the second model the interaction of career criminals and local crooks speeds up the diffusion of criminal know how and criminal technology in the third model the daily contact of youth with criminal adults and criminal peers results in the erosion of morals and hence in a greater predisposition toward crime the paper shows that a myriad empirical evidence both statistical and anecdotal lends support to the previous models in general and to the congestion in law enforcement model in particular

and a hockey game broke out crime and punishment in the nhl i introduction the economic theory of crime predicts that an increase in policing resources will lead to a decrease in the crime rate empirically determining the magnitude of this effect has proved difficult however because of an endogeneity problem although variations in the allocation of policing resources are expected to affect crime rates the reverse may also hold true cornwell and trumbull 1994 levitt 1997 the endogeneity problem can be avoided to a large degree by studying situations in which changes in the allocation of policing resources occur independent from crime rates in an innovative and influential study mccormick and tollison 1984 apply the economic theory of crime to rules infractions in a sports contest they analyze a policy change in the atlantic coast conference acc basketball tournaments in 1979 the acc increased the number of referees in the tournament games mccormick and tollison analyze the effect of increasing the number of referees on the number of fouls called their approach is unlikely to suffer from a severe endogeneity bias because the policy change occurred only once and furthermore occurred between tournament seasons on the other hand insofar as rules infractions in sports contests are analogous to criminal activity mccormick and tollison measure arrests rather than crimes the effect of an increase in policing resources on arrests cannot be resolved by theory for a given crime rate increases in police budgets and forces enable greater monitoring of criminal activity and consequently lead to more arrests the crime rate however is itself a function of the level of policing resources rational criminals realize that greater monitoring increases the probability that their actions will result in arrest and may be deterred from committing crimes this decreases the crime rate the net effect on the total number of arrests is ambiguous because it depends on whether the monitoring or deterrent effect dominates mccormick and tollison find that increasing the number of referees leads to a reduction in the number of fouls called this suggests that the deterrent effect dominates the monitoring effect shortly after their study was published it was recognized in surveys of both sports economics by cairns et al 1985 and crime by cameron 1988 we examine a natural experiment in sports to further understand the monitoring and deterrent effects in the 1999 2000 season the national hockey league nhl games had either one or two referees 1 we find that games with two referees have more penalties called suggesting that the monitoring effect dominates the deterrent effect we then use an instrumental variables technique to determine the effect of the number of referees on the number of infractions actually committed by players in the game we find that the number of referees does not significantly affect the number of infractions committed this is direct evidence that the deterrent effect is inconsequential in this context our results are unlikely to suffer from an endogeneity bias because the variation in the number of referees is independent of the rate of infractions in the individual games ii the nhl experiment enforcement of the rules in an nhl game is done by referees and linesmen the nhl has historically utilized one referee and two linesmen the linesmen are responsible for identifying infractions that result in a stoppage of play such as icing sending the puck from one end of the rink to the other and off sides entering the offensive zone before the puck the referee is responsible for identifying more severe infractions such as slashing swinging a stick at an opponent hooking using a stick to impede the progress of an opponent and fighting fisticuffs when one of these infractions is identified by the referee a penalty is called and the offending player is removed from the ice for a period of time depending on the severity of the penalty