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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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  • Fu, Chao

    (University of WI)

  • Wolpin, Kenneth I.

    (Rice University and University of PA)

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 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.

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  • Fu, Chao & Wolpin, Kenneth I., 2014. "Structural Estimation of a Becker-Ehrlich Equilibrium Model of Crime: Allocating Police across Cities to Reduce Crime," Working Papers 14-020, Rice University, Department of Economics.
    • Handle: RePEc:ecl:riceco:14-020
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