Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250615 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14954
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Intuitively, by increasing the opportunity cost of engaging in criminal activities, positive economic shocks should reduce crime. However, the empirical evidence on the relationship between economic shocks and criminal behavior is at best ambiguous. This may be because certain types of shocks make the booty more attractive and thus constitute an incentive to predate. Beyond this basic distinction between an "opportunity cost" and a "rapacity" mechanism that may mediate the effect of economic shocks on crime, this chapter proposes a simple conceptual framework to understand this nuanced relationship. We posit that the way that economic shocks shape criminal behavior depends on three factors: i) whether the shock comes from a legal or an illegal source, ii) the extent to which the shock source is more or less lootable, and iii) the presence of contextual factors that shape the relative importance of the opportunity cost and the rapacity effect, such as the underlying level of economic inequality, the institutional strength and law enforcement capacity of the state, and whether there are instances of accelerated and hazardous economic growth that likely create social disorganization and institutional unbalance. We use this taxonomy to review the seemingly inconclusive empirical evidence, and close by highlighting current persisting puzzles as well as areas where additional research on the relationship between economic shocks and crime would be welcome.
Subjects: 
economic shocks
crime
opportunity cost
rapacity
illegal activity
inequality
institutions
social disorganization
JEL: 
K42
J30
D74
F16
Document Type: 
Working Paper

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