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Recent research has generated conflicting findings regarding the role of employment and earnings versus criminal justice sanctions in reducing crime. Further disagreement exists over the relative effectiveness of increased certainty versus increased severity of punishment as deterrents to crime. This paper uses a large data set containing criminal and labor market histories of a broad sample of young male arrestees to estimate an economic model of crime. Deterrence, incapacitation, and criminal human capital effects are measured, and the effects of employment and earnings on criminal activity are estimated. The results largely reconcile the conflicting findings from previous research.
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