Health, Crime, and the Labor Market: Theory and Policy Analysis

Abstract

Health has a significant impact on labor market outcomes, and thus on criminal decisions. We document that health positively affects an individual's wage and employment probability but has a negative effect on criminal activities. To study the economic mechanism behind these findings, we build an equilibrium search model of health, crime, and the labor market. We perform public policy experiments in the model and study their impacts on crime and the labor market. We find that by introducing Medicare-for-all, the crime rate in the economy would decrease by one percentage point while the aggregate output would increase by more than 10%.

Keywords: health, crime, labor search, health insurance, crime policy, Medicare-for-all

JEL Classification: E24, I10, I13, J01, J08