Publisher's Synopsis
In nowadays global labor market, the basic idea underlying the model is that young men have two types of jobs available tothem -skilled and unskilled - where wage profiles are rising in the former (due to accumulation of human capital, training and experience) and flat in the latter (no training). If discounted wages are equalized across jobs, the unskilled wage would start above and end below skilled wage. Also, human capital theory suggests that jobstability will be greater in skilled sector than in the unskilled sector. Given these predictions, and assuming that a criminal conviction adversely affects prospects of getting a skilled job, it is likely that conviction is associated with higher pay and higher job instability. So, low skillful workers usually do criminal behaviors more than high skillful workers in our societies nowadays.Concerning how to examine the impact of legitimate labor market experiences (e.g., unemployment) and sanctions on criminal behavior whether they have relationship question? Broadly speaking, the empirical findings are that (i) poor legitimate labor market opportunities of potential criminals, such as low wages and high rates of unemployment, increases the supply of criminal activities and (ii) sanctions deter crime. Unemployment could be taken to influence the opportunity cost of illegal activity. High rates of unemployment growth could be taken to imply a restriction on the availability of legal activities, and thus serve to ultimately reduce the opportunity cost of engaging in illegal activities. Although theoretically well-defined, most empirical studies of the unemployment-crime relationship have provided mixedevidence. Instead of primarily focusing on crime as a function of unemployment, they use a richer set of controls, like deterrence, employment status, age, education, race and neighbourhoodcharacteristics. One problem with most work and crime models is that they assume both activities are mutually exclusive. This may be a problematic assumption when considering disadvantaged youths. The fact that a youth can shift from crime to an unskilled job and back again or can commit crime while holding a legal job means that the supply of youths to crime will be quite elastic with respect to relative rewards from crime vis-a-vis legal work or to the number of criminal opportunities. From the 1970s through the 1990s the labor market prospects for unskilled workers in most OECD countries has deteriorated considerably. In particular, the realearnings of young unskilled men fell, while income inequality rose. This suggests that as the earnings gap widens, relative deprivation increases, which in turn leads to increases in crime. A substantial problem that has been ignored in the vast majority of empirical studies is nonstationarity of crime rates. A time-series is said to be nonstationary if (1) the mean and/or variance does not remain constant over time and (2) covariance between observations depends on the time at which they occur.
