Unemployment and crime: the role of apprehension

An increase in the unemployment rate decreases the opportunity cost of crime and increases the crime rate according to standard microeconomics models. However, a large body of empirical research has shown that an increase in unemployment may increase or decrease crime. By incorporating the return to crime into standard economic models, this paper shows that an increase in unemployment, as in recessions, decreases the opportunity cost of crime and the return to crime as well. As a result, the effect of unemployment on crime is ambiguous and depends on the apprehension rate. An increase in the unemployment rate tends to decrease the crime rate at lower apprehension rates, but to increase it at higher apprehension rates. An increase in the generosity of unemployment insurance benefits does not necessarily reduce the crime rate, and the effect of more generous unemployment insurance on crime depends again on the apprehension rate.     

Measuring the role of liquid assets in consumption: A cross country view of the world economic periphery

A new non‐traditional identity for the role of liquid assets in consumption in terms of income distribution effect is developed and analyzed. It is contended that in the case of developing countries with increasing monetization of the economy, the rapidly accumulating liquid assets relative to income indicate a highly skewed distribution of income which in turn is conducive to their saving behaviour. The argument is theoretically presented and statistically tested for two major developing regions of the world, Asia and Latin America. By using cross country data, their regional consumption functions are constructed, the long term elasticities are estimated and the aggregate consumption expenditures for three years are generated.