On the political economy of income redistribution and crime

This article analyzes a general equilibrium model in which agents choose to specialize in either legitimate or criminal activities. Expenditures on po lice to apprehend criminals, as well as income redistribution, are determin ed endogenously through majority voting. We investigate how crime, redistri bution, and police expenditures depend on characteristics of the underlying distribution of income-earning abilities and on the apprehension technolog y. Our model accounts for the positive correlation between inequality and c rime, the positive correlation between expenditures on police and redistrib ution, and the lack of correlation between crime and redistribution observe d in U.S. data.