Public Expenditures and Youth Crime

University dissertation from Uppsala : Nationalekonomiska institutionen

Abstract: This dissertation comprises three essays on public expenditures and youth crime.Essay 1 deals with the modelling of youths’ criminal behavior and analyzes the public decision to allocate resources to school and leisure activities. First, an individual time allocation model with a choice set containing school, leisure and crime is set up. Moreover, two sources of heterogeneity are allowed for; return from crime and the valuation of future. A condition for participation in crime and the allocation of time are derived and discussed. Second, a government is added to the model. Given a welfare function, the government is to weight the benefit of consumption against the crime reducing effects of expenditures. The optimal allocation of resources is derived and discussed. Leisure and school expenditures are, for example, increasing in income and crime aversion, whereas the relative share of leisure expenditures is increasing in total expenditures. Besides the general model, an example model is specified and used for illustrative purposes.Essay 2 aims to extend the literature on youth crime by incorporating school quality. A theoretical model with a choice set containing work, crime, school and leisure, is set up and analyzed. By altering the future return to school, school quality affects the decision to participate in crime, as well as the time spent on crime if participating. The viability of school quality as a crime controlling policy depends on the mechanism that transform school time into future gains, and how these gains are perceived. The theoretical analysis is followed by an empirical investigation using the American National Longitudinal Survey of Youths, cohort 1997 (NLSY97). Controlling for, for example, individual abilities and peer environment, and using student teacher ratio and school size as measures of school quality, weak evidence is found in favor of school quality as a crime controlling measure.Essay 3 studies, using Swedish municipal panel data, the effects of leisure and school expenditures on the rate of four ‘typical’ youth crimes; robbery, moped theft, assault and graffiti. The low aggregation level of crime data coupled with small populations in many municipalities bring out the discrete nature of crime data, which motivates a count data framework for the analysis. Departing from an exponential model specification, three different estimators are discussed and employed; pooled Poisson, fixed effects Poisson and quasi-differenced GMM. Controlling for demographic and socioeconomic characteristics, the essay finds statistically significant effects from overall municipal leisure related expenditures on three of the four crimes. Moreover, the effects differ between the crimes and types of municipalities. No effects are found from upper secondary school expenditures, however.

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