This thesis develops three dynamic quantitative equilibrium models with heterogeneous agents, tackling issues related to the criminal participation of individuals and the labor market. The first chapter studies the effect of hard drugs addiction on property crimes and hard drugs selling in the US. A dynamic equilibrium model quantifying how much of the observed property crime rate is accounted for by hard drugs addiction is specified and estimated. The model is framed in both a rational addiction and a rational crime participation environment. The results show that a substantial part of property crimes, approximately 26%, is accounted for by predatory crime to finance addiction. The estimated model is in turn used to quantify the economic consequences of a compulsory drug treatment scheme for all arrested felons, and the effects of a legalization policy. The first policy experiment suggests a decrease in the property crime rate by 11%, while under the new legal regime the property crime rate is found to decrease by 18%. The second chapter studies the effects of both labor market conditions and asset poverty on the property crimes involvement of American males. The property crimes arrest rate has consistently been four times higher for black males if compared to white ones. Another set of stylized facts show for the first demographic group lower educational levels and worse labor market performances. A dynamic equilibrium model is developed, exploiting these facts to quantitatively assess the race crime gap. The model is calibrated relying on US data and solved numerically. Simulation results show that the observed poverty and labor market outcomes account for as much as 90% of the arrest rates ratio. Finally, the model is used to compare two alternative policy experiments aimed at reducing the aggregate crime rate: increasing the expenditure on police seems to be cost effective, when compared to an equally expensive lump-sum subsidy targeted to the high school dropouts. The last chapter studies the equilibrium welfare effects of introducing mandated severance payments in a labor market with costly mobility, where self-insurance through a riskless asset is the only way to smooth fluctuations in labor income due to unemployment shocks. The framework allows for wage flexibility at the level of the individual firm-worker match. Wages vary with both tenure and productivity of the workers. When severance payments are introduced, the firm can potentially undo their effect by modify ing the wage profile. Workers entry wages fall by the expected present value of the future payment. However, because of incomplete markets, workers are unlikely to be indifferent about the slope of the wage profile. The model is solved numerically and calibrated to the US economy. We compare a welfare measure for the baseline economy, i.e. without severance payments, to those of a series of counterfactual economies where the severance payments are introduced at increasing levels. Welfare gains and costs are heterogeneous in the population but seem to be quantitatively small for plausible values of the severance payments.

The link between drug use and crime is well established in academic, policy and treatment, particularly the idea that drug use causes crime, despite the nature of the drug-crime relationship varying between sub-groups of drug using offenders and not existing at all for the majority of drug using non-offenders1. Research suggests the amount of crime attributable to drug use has been over exaggerated. There is a dearth of research examining the drug-crime relationship between non-treatment and non-offender samples, particularly in the UK. There is also less research examining the notion that both drug use and crime are caused by other (third) factors compared to the research examining the idea that drug use causes crime. Thus this research aims to compare a group of drug using offenders (n=149) with a group of drug using non-offenders (n=111) on a number of childhood risk factors (perceived parenting, negative life-events and impulsivity), school and peer variables, as well as their coping to strategies. The aim is to ascertain if criminality among drug users is attributable to these other (third) factors, instead of their drug use causing the crime to facilitate a more in depth understanding of the relationship between drug use and offending. Group comparisons followed by regression analyses were employed to examine whether any variables predicted group membership (drug using offender or a drug using non-offender), while age, job and drug use severity were controlled for. A high number of negative life events experienced before age 18, earlier age of onset for drug use, always being in trouble with the police with friends, receiving no qualifications from school, being expelled from school and behavioural avoidant coping predicted being a drug using offender, while the reasons for initiating drug use (out of curiosity and to socialise with friends) predicted being a drug using non-offender. The results show significant differences exist between drug users that go on to become offenders and drug users who do not, and these differences are attributable to offending/non-offending status rather than drug use. The implications for treatment and policy are considered.

This thesis sets out to explore the influences of unemployment upon senses of identity and involvement in crime in Stoke-on-Trent. It draws upon the Free Association Interview method to explore the lives and experiences of a group of men living in some of the most deprived parts of the city between 2010 and 2014. It looks at experiences of unemployment, underemployment and insecure employment upon the lives and narratives of these men and their perceptions of the world around them. It aims to understand the effect of their experiences and how they have come to reconcile their position in society. The thesis strives to outline how people construct and maintain an identity which makes sense to them in the face of the significant challenges posed by the deindustrialisation and prolonged decline of the city of Stoke-on-Trent. It seeks to reveal how their evolving sense of self is influenced by the communities in which they live, whether that is an urban, social housing estate, a hostel or on the streets. The thesis looks to challenge existing hegemonic depictions of what it is to be part of the homogenously branded socially excluded and the manner in which senses of social order which, although they may not be seen as ‘normal’ or acceptable to wider society, are formed. It argues that the people deemed socially excluded are active and engaged actors seeking to find senses of security, belonging and unity in an increasingly atomised, insecure and fragmented world.