Workplace Deviance and the Business Cycle

We examine the relationship between the incidence of workplace deviance (on-the-job crime) and the business cycle. A worker's probability of future employment depends on whether she has been deviant as well as on the availabilty of jobs. Using a two period model we show that the net impact on deviant behaviour to changes in unemployment is ambiguous and depends on the strength of two effects. If the probability of being employed for a non-deviant improves as expected market conditions improve, then that lowers deviant behaviour, while if the deviant's probability of being employed improves as market conditions improve, that increases deviance as market conditions improve. In either case, there is a setup cost to deviant behaviour and the attractiveness of incurring that increases with an increase in expected probability of future employment. This second effect therefore increases the incentive to be deviant and thus can reinforce the first effect or weaken it. Finally, we show that an increase in optimism i.e. the probability of facing a recession going down unambiguously increases deviant behaviour.