nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2006‒11‒12
two papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Crime and Punishment in the "American Dream" By Di Tella, Rafael; Dubra, Juan
  2. Economic Impact of Immigration on the Host Country: The Case of Norway By Feridun, Mete

  1. By: Di Tella, Rafael; Dubra, Juan
    Abstract: We observe that countries where belief in the "American dream" (i.e., effort pays) prevails also set harsher punishment for criminals. We know from previous work that beliefs are also correlated with several features of the economic system (taxation, social insurance, etc). Our objective is to study the joint determination of these three features (beliefs, punitiveness and economic system) in a way that replicates the observed empirical patterns. We present a model where beliefs determine the types of contracts that firms offer and whether workers exert effort. Some workers become criminals, depending on their luck in the labor market, the expected punishment, and an individual shock that we call "meanness". It is this meanness level that a penal system based on "retribution" tries to detect when deciding the severity of the punishment. We find that when initial beliefs differ, two equilibria can emerge out of identical fundamentals. In the "American" (as opposed to the "French") equilibrium, belief in the "American dream" is commonplace, workers exert effort, there are high powered contracts (and income is unequally distributed) and punishments are harsh. Economists who believe that deterrence (rather than retribution) shapes punishment can interpret the meanness parameter as pessimism about future economic opportunities and verify that two similar equilibria emerge.
    Keywords: beliefs; multiple equilibria; illegal behavior; fines; sentences.
    JEL: K42 K14 E62 P16
    Date: 2006–10
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:500&r=ltv
  2. By: Feridun, Mete
    Abstract: This article aims at investigating the nature of the causal relationship between immigration and economic development measured by GDP per capita in Norway using Granger causality test. The results on the unit root test indicate that all the series are non-stationary and are in I(1) process. The Johansen cointegration test reveals that there is no cointegration among the data sets. The Granger causality test shows that when the level of immigration increases, GDP per capita also increases. It has also been found that immigration has no impact on unemployment, and vice versa.
    Keywords: Economic development; immigration; unemployment; cointegration
    JEL: A1
    Date: 2005–01
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:740&r=ltv

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