It is well known that African-American males underperform in the Univted States according to a lot of economic dimensions: they work less, are paid less, are more and longer unemployed, and they are much more involved in crime, in particular property crime. While these are all important problems, let us focus on the last one for a moment. What could be done to reduce the property crime rate among blacks? One could increase policing, or one could improve their economic condition through redistribution.
Marco Cozzi builds a dynamic general equilibrium model where agents differ by race and education and have the opportunity to commit crimes to supplement their income. Employment opportunities differ by education and race, both of which are exogenous, and agents can turn down job offers. The government supplies unemployment insurance, which is redistributive, and fights crime at a cost, wherein caught criminals are incarcerated. Cozzi claims this model, calibrated to the United States, replicates the basic features of the distribution of crime and employment. He then proceeds to policy experiments.
First, give $481 to every highschool dropout every year, that is 2.5% of their non-asset income. This costs $73 to every citizen and reduces property crime by 6.8%. Second, use those $73 to increase policing, from $127. The crime rate drops by 18.6%. Thus policing is more effective than redistribution in reducing the property crime rate. It would nice to know how sensitive this result is to various assumptions, because it is an important result.