Do Illegal Market Incentives Affect Participation in Legitimate Employment?

Do Illegal Market Incentives Affect Participation in Legitimate Employment?

Student: Holly Nguyen

 

This project explores how wage incentives from illegal markets influence both the decision to engage in crime and participation decisions in legitimate employment opportunities. Specifically, we model offender utility functions to determine what effect increases in illegal wages might have on reducing the intensity of participation in the legal market. Analytically, this involves a) computing legal and illegal wage rates and elasticities, b) and determining marginal rates of substitution for legal hours worked, based on illegal earning opportunities through the computation of the cross-elasticity between legal hours and illegal wages.

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