NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Employment, Dynamic Deterrence and Crime

Susumu Imai, Kala Krishna

NBER Working Paper No. 8281
Issued in May 2001
NBER Program(s):   LS

Using monthly panel data we solve and estimate, using maximum likelihood techniques, an explicitly dynamic model of criminal behavior where current criminal activity adversely affects future employment outcomes. This acts as 'dynamic deterrence' to crime: the threat of future adverse effects on employment payoffs when caught committing crimes reduces the incentive to commit them. We show that this dynamic deterrence effect is strong in the data. Hence, policies which weaken dynamic deterrence will be less effective in fighting crime. This suggests that prevention is more powerful than redemption since the latter weakens dynamic deterrence as anticipated future redemption allows criminals to look forward to negating the consequences of their crimes. Static models of criminal behavior neglect this and hence sole reliance on them can result in misleading policy analysis.

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Document Object Identifier (DOI): 10.3386/w8281

Published: Imai, Susumu and Kala Krishna. “Employment, Dynamic Deterrence and Crime.” International Economic Review 45, 3 (2004): 845-872.

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