IDEAS home Printed from https://ideas.repec.org/a/eee/dyncon/v144y2022ics0165188922002330.html
   My bibliography  Save this article

Health, crime, and the labor market: Theory and policy analysis

Author

Listed:
  • Otsu, Yuki
  • Yuen, C.Y. Kelvin

Abstract

Better health improves labor market outcomes, and better labor market outcomes discourage individuals from engaging in criminal behavior. Therefore, health insurance policies would affect labor market outcomes and criminal behavior. To explain the mechanism and the impact, we build an equilibrium search model of health, crime, and the labor market. We then use the model to conduct policy experiments and quantify their impacts on the economy. The calibrated model shows that the Medicare-for-all and the Employer Mandate under the Affordable Care Act would increase the aggregate output by more than 10%. However, while Medicare-for-all reduces the crime rate and inequality, the Employer Mandate increases both. Furthermore, policy effects vary by individual’s skill and health status.

Suggested Citation

  • Otsu, Yuki & Yuen, C.Y. Kelvin, 2022. "Health, crime, and the labor market: Theory and policy analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    • Handle: RePEc:eee:dyncon:v:144:y:2022:i:c:s0165188922002330
    DOI: 10.1016/j.jedc.2022.104529
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165188922002330
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jedc.2022.104529?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Marcus Hagedorn & Iourii Manovskii, 2008. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited," American Economic Review, American Economic Association, vol. 98(4), pages 1692-1706, September.
    2. Naoki Aizawa & Hanming Fang, 2020. "Equilibrium Labor Market Search and Health Insurance Reform," Journal of Political Economy, University of Chicago Press, vol. 128(11), pages 4258-4336.
    3. Seena Fazel & Gautam Gulati & Louise Linsell & John R Geddes & Martin Grann, 2009. "Schizophrenia and Violence: Systematic Review and Meta-Analysis," PLOS Medicine, Public Library of Science, vol. 6(8), pages 1-15, August.
    4. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    5. Qiwei He & Scott Barkowski, 2020. "The effect of health insurance on crime: Evidence from the Affordable Care Act Medicaid expansion," Health Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 261-277, March.
    6. García-Gómez, Pilar & Jones, Andrew M. & Rice, Nigel, 2010. "Health effects on labour market exits and entries," Labour Economics, Elsevier, vol. 17(1), pages 62-76, January.
    7. repec:hal:spmain:info:hdl:2441/8921 is not listed on IDEAS
    8. Aalsma, M.C. & White, L.M. & Lau, K.S.L. & Perkins, A. & Monahan, P. & Grisso, T., 2015. "Behavioral health care needs, detention-based care, and criminal recidivism at community reentry from Juvenile detention: A multisite survival curve analysis," American Journal of Public Health, American Public Health Association, vol. 105(7), pages 1372-1378.
    9. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    10. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    11. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    12. Kevin T. Schnepel, 2018. "Good Jobs and Recidivism," Economic Journal, Royal Economic Society, vol. 128(608), pages 447-469, February.
    13. Dizioli, Allan & Pinheiro, Roberto, 2016. "Health insurance as a productive factor," Labour Economics, Elsevier, vol. 40(C), pages 1-24.
    14. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416, Elsevier.
    15. Schroeder, Ryan D. & Hill, Terrence D. & Haynes, Stacy Hoskins & Bradley, Christopher, 2011. "Physical health and crime among low-income urban women: An application of general strain theory," Journal of Criminal Justice, Elsevier, vol. 39(1), pages 21-29.
    16. Trevisan, Elisabetta & Zantomio, Francesca, 2016. "The impact of acute health shocks on the labour supply of older workers: Evidence from sixteen European countries," Labour Economics, Elsevier, vol. 43(C), pages 171-185.
    17. Jacob Vogler, 2020. "Access to Healthcare and Criminal Behavior: Evidence from the ACA Medicaid Expansions," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(4), pages 1166-1213, September.
    18. Svetlana Pashchenko & Ponpoje Porapakkarm, 2013. "Quantitative Analysis of Health Insurance Reform: Separating Regulation from Redistribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 383-404, July.
    19. Roozbei Hosseini & Karen Kopecky & Kai Zhao, 2022. "The Evolution of Health over the Life Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 237-263, July.
    20. Pietro Garibaldi & Etienne Wasmer, 2005. "Equilibrium Search Unemployment, Endogenous Participation, And Labor Market Flows," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 851-882, June.
    21. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "What causes violent crime?," European Economic Review, Elsevier, vol. 46(7), pages 1323-1357, July.
    22. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    23. Robert Jäckle & Oliver Himmler, 2010. "Health and Wages: Panel Data Estimates Considering Selection and Endogeneity," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
    24. Kenneth Burdett & Ricardo Lagos & Randall Wright, 2004. "An On-The-Job Search Model Of Crime, Inequality, And Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 681-706, August.
    25. Lixin Cai, 2009. "Effects of Health on Wages of Australian Men," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 290-306, September.
    26. Juergen Jung, 2022. "Estimating transition probabilities between health states using US longitudinal survey data," Empirical Economics, Springer, vol. 63(2), pages 901-943, August.
    27. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    28. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
    29. Randi Hjalmarsson & Matthew J. Lindquist, 2022. "The Health Effects of Prison," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 234-270, October.
    30. Matthew S. Dey & Christopher J. Flinn, 2005. "An Equilibrium Model of Health Insurance Provision and Wage Determination," Econometrica, Econometric Society, vol. 73(2), pages 571-627, March.
    31. repec:hal:wpspec:info:hdl:2441/8921 is not listed on IDEAS
    32. Christine Braun, 2019. "Crime and the minimum wage," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 32, pages 122-152, April.
    33. repec:eee:labchp:v:3:y:1999:i:pc:p:3309-3416 is not listed on IDEAS
    34. Engelhardt, Bryan & Rocheteau, Guillaume & Rupert, Peter, 2008. "Crime and the labor market: A search model with optimal contracts," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1876-1891, October.
    35. Roozbei Hosseini & Karen Kopecky & Kai Zhao, 2022. "The Evolution of Health over the Life Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 237-263, July.
    36. Kenneth Burdett & Ricardo Lagos & Randall Wright, 2003. "Crime, Inequality, and Unemployment," American Economic Review, American Economic Association, vol. 93(5), pages 1764-1777, December.
    37. Richard G. Frank & Thomas G. McGuire, 2010. "Mental Health Treatment and Criminal Justice Outcomes," NBER Chapters, in: Controlling Crime: Strategies and Tradeoffs, pages 167-207, National Bureau of Economic Research, Inc.
    38. Carlos Dobkin & Amy Finkelstein & Raymond Kluender & Matthew J. Notowidigdo, 2018. "The Economic Consequences of Hospital Admissions," American Economic Review, American Economic Association, vol. 108(2), pages 308-352, February.
    39. Halla, Martin & Zweimüller, Martina, 2013. "The effect of health on earnings: Quasi-experimental evidence from commuting accidents," Labour Economics, Elsevier, vol. 24(C), pages 23-38.
    40. Yang, Crystal S., 2017. "Local labor markets and criminal recidivism," Journal of Public Economics, Elsevier, vol. 147(C), pages 16-29.
    41. Kevin T. Schnepel, 2018. "Good Jobs and Recidivism," Economic Journal, Royal Economic Society, vol. 128(608), pages 447-469.
    42. Ming-Jen Lin, 2008. "Does Unemployment Increase Crime?: Evidence from U.S. Data 1974–2000," Journal of Human Resources, University of Wisconsin Press, vol. 43(2), pages 413-436.
    43. Mirko Draca & Stephen Machin, 2015. "Crime and Economic Incentives," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 389-408, August.
    44. Hefei Wen & Jason M. Hockenberry & Janet R. Cummings, 2014. "The Effect of Substance Use Disorder Treatment Use on Crime: Evidence from Public Insurance Expansions and Health Insurance Parity Mandates," NBER Working Papers 20537, National Bureau of Economic Research, Inc.
    45. Melvin Stephens, Jr. & Desmond J. Toohey, 2018. "The Impact of Health on Labor Market Outcomes: Experimental Evidence from MRFIT," NBER Working Papers 24231, National Bureau of Economic Research, Inc.
    46. Itzik Fadlon & Torben Heien Nielsen, 2021. "Family Labor Supply Responses to Severe Health Shocks: Evidence from Danish Administrative Records," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 1-30, July.
    47. Jordi Blanes i Vidal & Tom Kirchmaier, 2018. "The Effect of Police Response Time on Crime Clearance Rates," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 855-891.
    48. Alison Evans Cuellar & Larkin S. McReynolds & Gail A. Wasserman, 2006. "A cure for crime: Can mental health treatment diversion reduce crime among youth?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(1), pages 197-214.
    49. Pietro Garibaldi & Etienne Wasmer, 2005. "Equilibrium Search Unemployment, Endogenous Participation and Labor Market Flows," SciencePo Working papers hal-01020784, HAL.
    50. Schroeder, Ryan D. & Hill, Terrence D. & Haynes, Stacy Hoskins & Bradley, Christopher, 2011. "Physical health and crime among low-income urban women: An application of general strain theory," Journal of Criminal Justice, Elsevier, vol. 39(1), pages 21-29, January.
    51. Kinner, S.A. & Wang, E.A., 2014. "The case for improving the health of ex-prisoners," American Journal of Public Health, American Public Health Association, vol. 104(8), pages 1352-1355.
    52. M. Antonella Mancino, 2022. "A Search Model Of Early Employment Careers And Youth Crime," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 329-390, February.
    53. Richard Frank & Thomas G. McGuire, 2010. "Mental Health Treatment and Criminal Justice Outcomes," NBER Working Papers 15858, National Bureau of Economic Research, Inc.
    54. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    55. Naoki Aizawa, 2019. "Labor market sorting and health insurance system design," Quantitative Economics, Econometric Society, vol. 10(4), pages 1401-1451, November.
    56. Wilper, A.P. & Woolhandler, S. & Boyd, J.W. & Lasser, K.E. & McCormick, D. & Bor, D.H. & Himmelstein, D.U., 2009. "The health and health care of US prisoners: Results of a nationwide survey," American Journal of Public Health, American Public Health Association, vol. 99(4), pages 666-672.
    57. Wen, Hefei & Hockenberry, Jason M. & Cummings, Janet R., 2017. "The effect of Medicaid expansion on crime reduction: Evidence from HIFA-waiver expansions," Journal of Public Economics, Elsevier, vol. 154(C), pages 67-94.
    58. Pilar García-Gómez & Hans van Kippersluis & Owen O’Donnell & Eddy van Doorslaer, 2013. "Long-Term and Spillover Effects of Health Shocks on Employment and Income," Journal of Human Resources, University of Wisconsin Press, vol. 48(4), pages 873-909.
    59. Karin Edmark, 2005. "Unemployment and Crime: Is There a Connection?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(2), pages 353-373, June.
    60. Yuki Otsu, 2016. "Crime, Search, and Ex-offenders’ Accessibility to Labor Markets," LABOUR, CEIS, vol. 30(4), pages 393-414, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lastauskas, Povilas & Tatsi, Eirini, 2017. "Spatial Nexus in Crime and Unemployment in Times of Crisis," Working Paper Series 2/2017, Stockholm University, Swedish Institute for Social Research.
    2. Engelhardt, Bryan & Rocheteau, Guillaume & Rupert, Peter, 2008. "Crime and the labor market: A search model with optimal contracts," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1876-1891, October.
    3. Kangoh Lee, 2018. "Unemployment and crime: the role of apprehension," European Journal of Law and Economics, Springer, vol. 45(1), pages 59-80, February.
    4. Belloni, Michele & Simonetti, Irene & Zantomio, Francesca, 2019. "Long-run effects of health shocks in a highly regulated labour market," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201922, University of Turin.
    5. Simonetti, Irene & Belloni, Michele & Farina, Elena & Zantomio, Francesca, 2022. "Labour market institutions and long term adjustments to health shocks: Evidence from Italian administrative records," Labour Economics, Elsevier, vol. 79(C).
    6. Silvia Fedeli & Vitantonio Mariella & Marco Onofri, 2018. "Determinants of Joblessness During the Economic Crisis: Impact of Criminality in the Italian Labour Market," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(2), pages 559-588, September.
    7. Erkmen G. Aslim & Murat C. Mungan & Carlos I. Navarro & Han Yu, 2022. "The Effect of Public Health Insurance on Criminal Recidivism," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(1), pages 45-91, January.
    8. Otto Lenhart, 2021. "Earned income tax credit and crime," Contemporary Economic Policy, Western Economic Association International, vol. 39(3), pages 589-607, July.
    9. Compton, Andrew, 2019. "Decomposing the Societal Opportunity Costs of Property Crime," MPRA Paper 97002, University Library of Munich, Germany.
    10. Magaly Faride Herrera Giraldo & Carlos Giovanni González Espitia, 2022. "Understanding the Spatial Relationship Between the Informal Labor Market and Violent Crime in Cali, Colombia," Icesi Economics Working Papers 20344, Universidad Icesi.
    11. Christine Braun, 2019. "Crime and the minimum wage," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 32, pages 122-152, April.
    12. Pallab K. Ghosh & Gary A. Hoover & Zexuan Liu, 2020. "Do State Minimum Wages Affect the Incarceration Rate?," Southern Economic Journal, John Wiley & Sons, vol. 86(3), pages 845-872, January.
    13. Fone, Zachary S. & Sabia, Joseph J. & Cesur, Resul, 2023. "The unintended effects of minimum wage increases on crime," Journal of Public Economics, Elsevier, vol. 219(C).
    14. Corvalan, Alejandro & Pazzona, Matteo, 2019. "Persistent commodity shocks and transitory crime effects," Journal of Economic Behavior & Organization, Elsevier, vol. 158(C), pages 110-127.
    15. Carlsson, Mikael & Eriksson, Stefan & Gottfries, Nils, 2006. "Testing Theories of Job Creation: Does Supply Create Its Own Demand?," Working Paper Series 194, Sveriges Riksbank (Central Bank of Sweden).
    16. Altindag, Duha T., 2012. "Crime and unemployment: Evidence from Europe," International Review of Law and Economics, Elsevier, vol. 32(1), pages 145-157.
    17. Eduardo Ferraz & Rodrigo Soares & Juan Vargas, 2022. "Unbundling the relationship between economic shocks and crime," Chapters, in: Paolo Buonanno & Paolo Vanin & Juan Vargas (ed.), A Modern Guide to the Economics of Crime, chapter 8, pages 184-204, Edward Elgar Publishing.
    18. Emmanuel Duguet & Christine Le Clainche, 2020. "The Socioeconomic and Gender Impacts of Health Events on Employment Transitions in France: A Panel Data Study," Journal of Human Capital, University of Chicago Press, vol. 14(3), pages 449-483.
    19. Ekaterina Aleksandrova & Venera Bagranova & Christopher J Gerry, 2021. "The effect of health shocks on labour market outcomes in Russia [Ageing and unused capacity in Europe: is there an early retirement trap?]," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 45(6), pages 1319-1336.
    20. Jan Eeckhout & Ilse Lindenlaub, 2019. "Unemployment Cycles," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(4), pages 175-234, October.

    More about this item

    Keywords

    Health; Crime; Labor search; Health insurance; Crime policy;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:dyncon:v:144:y:2022:i:c:s0165188922002330. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jedc .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.