Crime, different taxation, police spending and embodied human capital

We develop a model with crime, embodied human capital, police spending and three different taxation. Based on propositions examined analytically, numerically and empirically using a cross‐country panel data on crime, we contribute to the literature by identifying a positive crime‐labor income tax ne...

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Bibliographic Details
Published inThe Manchester school Vol. 88; no. 5; pp. 664 - 698
Main Authors Jia, Pengfei, Lim, King Yoong, Raza, Ali
Format Journal Article
LanguageEnglish
Published Manchester Blackwell Publishing Ltd 01.09.2020
Subjects
Anxiety
Crime prevention
Criminal justice system
Deterrence
Endogenous
Human capital
Income taxes
macroeconomics of crime
Panel data
Police
police spending
State court decisions
Taxation
Use taxes
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Summary:We develop a model with crime, embodied human capital, police spending and three different taxation. Based on propositions examined analytically, numerically and empirically using a cross‐country panel data on crime, we contribute to the literature by identifying a positive crime‐labor income tax nexus and a negative crime‐capital income tax nexus. The opposite effect between labor and capital income taxation on crime is novel in the literature. We also document positive association between crime and consumption tax, which suggests that apprehension probability (a proxy for the effectiveness of criminal justice system) is endogenous to fiscal mechanism. These findings have potential policy implications in that, there is a potential role for dedicated tax instruments to be used in supporting conventional crime prevention and deterrence policies.
ISSN:1463-6786
1467-9957
DOI:10.1111/manc.12317