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Structural Estimation of a Becker-Ehrlich Equilibrium Model of Crime: Allocating Police Across Cities to Reduce Crime

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  • Chao Fu
  • Kenneth I Wolpin

Abstract

We develop a model of crime in which the number of police, the crime rate, the arrest rate, the employment rate, and the wage rate are joint outcomes of a subgame perfect Nash equilibrium. The local government chooses the size of its police force and citizens choose among work, home, and crime alternatives. We estimate the model using metropolitan statistical area (MSA)-level data. We use the estimated model to examine the effects on crime of targeted federal transfers to local governments to increase police. We find that knowledge about unobserved MSA-specific attributes is critical for the optimal allocation of police across MSA’s.

Suggested Citation

  • Chao Fu & Kenneth I Wolpin, 2018. "Structural Estimation of a Becker-Ehrlich Equilibrium Model of Crime: Allocating Police Across Cities to Reduce Crime," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(4), pages 2097-2138.
    • Handle: RePEc:oup:restud:v:85:y:2018:i:4:p:2097-2138.
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    Cited by:

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    2. Ross Hickey & Steeve Mongrain & Joanne Roberts & Tanguy van Ypersele, 2021. "Private protection and public policing," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(1), pages 5-28, February.
    3. Blundell, Wesley & Evans, Mary F. & Stafford, Sarah L., 2021. "Regulating hazardous wastes under U.S. environmental federalism: The role of state resources," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    4. Alberto Ciancio & Camilo García-Jimeno, 2019. "The Political Economy of Immigration Enforcement: Conflict and Cooperation under Federalism," NBER Working Papers 25766, National Bureau of Economic Research, Inc.
    5. Bethencourt, Carlos, 2022. "Crime and social expenditure: A political economic approach," European Journal of Political Economy, Elsevier, vol. 75(C).
    6. David P. Byrne & Susumu Imai & Neelam Jain & Vasilis Sarafidis & Masayuki Hirukawa, 2019. "Identification and Estimation of Differentiated Products Models," Monash Econometrics and Business Statistics Working Papers 33/19, Monash University, Department of Econometrics and Business Statistics.
    7. Herzing, Mathias, 2021. "Multiple equilibria in the context of inspection probabilities depending on firms’ relative emissions," Resource and Energy Economics, Elsevier, vol. 63(C).
    8. Byrne, David P. & Imai, Susumu & Jain, Neelam & Sarafidis, Vasilis, 2022. "Instrument-free identification and estimation of differentiated products models using cost data," Journal of Econometrics, Elsevier, vol. 228(2), pages 278-301.
    9. Grey Gordon & John B. Jones & Urvi Neelakantan & Kartik Athreya, 2023. "Incarceration, Employment and Earnings: Dynamics and Differences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 677-697, December.
    10. Zanella, Giulio, 2020. "Prison Work and Convict Rehabilitation," IZA Discussion Papers 13446, Institute of Labor Economics (IZA).
    11. Kartik B. Athreya & Grey Gordon & John Bailey Jones & Urvi Neelakantan, 2021. "Incarceration, Earnings, and Race," Working Paper 21-11`, Federal Reserve Bank of Richmond.

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    More about this item

    Keywords

    Crime; Multiple equilibria; Estimation; Efficient police allocation;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Structural Estimation of a Becker-Ehrlich Equilibrium Model of Crime: Allocating Police Across Cities to Reduce Crime (REStud 2018) in ReplicationWiki

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