A partner in crime : assortative matching and bias in the crime market

I identify a discriminatory bias in partnership formation within the property crime mar- ket in the United States. Theoretically, the prisoner's dilemma creates an incentive for a criminal to form a partnership with a counterpart with the same probability of success, re- sulting in an equilibrium pattern of positive assortative matching. Using individual matched report-arrest data from the National Incident Based Reporting System and a novel empiri- cal strategy, I pinpoint matches where the underlying probability of success of two partners differ. This difference in probability is correlated with observable characteristics, which could be evidence for discrimination and search frictions. I find patterns consistent with discrimination in male-female partnerships and patterns consistent with search frictions in black-white matches. In particular, females in a male-female partnership are more likely to evade law-enforcement than males, even though on average males are more successful as a group. This results is robust to controlling for the criminal earnings, individual criminal offenses and market characteristics. Furthermore, these patterns are found also in criminal groups of a size bigger than 2. The result could be either due to pre-crime marital matching or discrimination

Females in Crime

In this paper I review the literature on gender in the economics of crime. The emerging picture is that women are increasingly involved in crime at all ages. Women are favored in the Justice process with lower probabilities of arrest, shorter sentences and lighter sentencing regimes. The possible existence of a bias means that female crime can not be curbed by the policy maker through sweeping deterrence policies that affect all criminals. Rather, the key to decreasing crime lies in the multitude of life-cycle events that impact the opportunity cost to crime. Females are successfully deterred by welfare policies, with effects driven by the subgroup of single mothers. However, given trends of decreasing fertility, the group of potential criminals responding to welfare policies is dwindling. Therefore, there is a need for more research into the incentives that deter female criminals. The purpose would be to expand the set of tools that the policy maker can use to limit rising female crime

Dynamic Causal Forests, with an Application to Payroll Tax Incidence in Norway

This paper develops a machine-learning method that allows researchers to estimate heterogeneous treatment effects with panel data in a setting with many covariates. Our method, which we name the dynamic causal forest (DCF) method, extends the causal-forest method of Wager and Athey (2018) by allowing for the estimation of dynamic treatment effects in a difference-in-difference setting. Regular causal forests require conditional independence to consistently estimate heterogeneous treatment effects. In contrast, DCFs provide a consistent estimate for heterogeneous treatment effects under the weaker assumption of parallel trends. DCFs can be used to create event-study plots which aid in the inspection of pre-trends and treatment effect dynamics. We provide an empirical application, where DCFs are applied to estimate the incidence of payroll tax on wages paid to employees. We consider treatment effect heterogeneity associated with personal- and firm-level variables. We find that on average the incidence of the tax is shifted onto workers through incidental payments, rather than contracted wages. Heterogeneity is mainly explained by firm-and workforce-level variables. Firms with a large and heterogeneous workforce are most effective in passing on the incidence of the tax to workers

Welfare Effect of Closing Loopholes in the Dividend-Withholding Tax: The Case of Cum-cum and Cum-ex Transactions

We study the effect of reforms that close loopholes in the enforcement of the dividend withholding tax (DWT). We focus on a Danish reform enacted in 2016, and compare Denmark to its Nordic neighbors. Our main outcome of interest is the quantity of stocks on loan. Before the reform all Nordic countries have a strong spike in stocks on loan centered around the ex-dividend day. The magnitude is large: on average excess stocks on loan peak at around 4 percent of the public float. The spike in lending is consistent with the most popular DWT arbitrage schemes. After the reform the spikes in Denmark disappear, but they continue in the other Nordics. We interpret this as evidence that the reform was successful at eliminating DWT arbitrage. We consider the welfare effects of the reform. Using synthetic difference-in-difference we find that stricter DWT enforcement resulted in a 130 percent (approx. 1.3 bln USD annually) increase in DWT revenue in Denmark. We detect no changes in foreign portfolio investment or dividend policy. We also consider DWT arbitrage among 15 European countries between 2010-2019. We find evidence of DWT arbitrage in all countries that levy DWT, though there is strong heterogeneity across countries. Importantly, similar to Denmark, Germany’s 2016 reform has eliminated the spikes in lending completely. We validate our identification strategy by showing that we find no evidence of DWT arbitrage in the UK, which does not levy a DWT

Uncovering the Gender Participation Gap in Crime

Research on the gender variation in the crime market, a peculiar labor market for illegal activities, is limited, although the issue is relevant per se and for its policy implications. We document a gender gap in criminal activities, based on property and white collar crimes, using data from the U.S. National Incident Based Reporting System. We show that there is a gender participation gap where around 30 percent of the crimes are committed by females. In order to explain, at least in part, the gender participation gap we investigate whether there are differences in incentives to be involved in criminal activities and in responsiveness to these incentives across gender. In particular we focus on criminal earnings and probability of arrest. We show that on average females earn 18 percent less than males while they face the same likelihood of arrest. We find that females are more responsive to changes in the expected probability of arrest, while males respond more to changes in the expected illegal earnings. The fact that females behave differently than males has implications for the heterogeneity in response to crime control policies. In addition, using a Blinder-Oaxaca type decomposition technique, we find that differences in incentives explain about 12 percent of the gender crime gap, while differences in responsiveness explain about 55 percent of the gap

Childhood-onset dystonia-causing KMT2B variants result in a distinctive genomic hypermethylation profile

Background: Dystonia is a clinically and genetically heterogeneous movement disorder characterized by sustained or intermittent muscle contractions causing abnormal, often repetitive, movements and/or postures. Heterozygous variants in lysine methyltransferase 2B (KMT2B), encoding a histone H3 methyltransferase, have been associated with a childhood-onset, progressive and complex form of dystonia (dystonia 28, DYT28). Since 2016, more than one hundred rare KMT2B variants have been reported, including frameshift, nonsense, splice site, missense and other in-frame changes, many having an uncertain clinical impact. Results: We characterize the genome-wide peripheral blood DNA methylation profiles of a cohort of 18 patients with pathogenic and unclassified KMT2B variants. We resolve the “episignature” associated with KMT2B haploinsufficiency, proving that this approach is robust in diagnosing clinically unsolved cases, properly classifying them with respect to other partially overlapping dystonic phenotypes, other rare neurodevelopmental disorders and healthy controls. Notably, defective KMT2B function in DYT28 causes a non-random DNA hypermethylation across the genome, selectively involving promoters and other regulatory regions positively controlling gene expression. Conclusions: We demonstrate a distinctive DNA hypermethylation pattern associated with DYT28, provide an epigenetic signature for this disorder enabling accurate diagnosis and reclassification of ambiguous genetic findings and suggest potential therapeutic approaches

Stairway to (Secrecy) Heaven: Market Attitudes towards Secrecy Shopping

We study asset price reactions to news on firms' decisions to acquire affiliates located in known secrecy havens. Our sample consists of data on the S&P 500 companies in the period 2007 to 2014. We find that acquisitions of secrecy havens are associated with a negative market reaction, particularly for firms with an existing network of secrecy haven affiliates. The market reaction to acquisitions of secrecy havens is particularly negative during the financial crisis years, since additional secrecy was likely undesirable during times of economic distress. The negative reaction is particularly strong in the retail sector, where reputational concerns should matter most. Investors react less negatively to secrecy haven acquisitions if the parent firm is well-governed and if the secrecy haven is located in a country with higher standard of living. Investors also react less negatively to acquisitions of secrecy havens with a low corporate tax rate, which indicates that they consider the potential future tax savings as positive news. Investors react positively to enforcement of tax information exchange agreements, which increase the transparency of the corporate structure to domestic authorities and investors without impacting the tax bill. The findings suggest that investors are concerned about firms' secrecy; however, potential future tax planning opportunities mitigate these concerns

Is Legal Pot Crippling Mexican Drug Trafficking Organizations? The Effect of Medical Marijuana Laws on US Crime

We examine the effect of medical marijuana laws (MML) on crime treating the introduc- tion of MML as a quasi-experiment and using three different data sources. First, using data from the Uniform Crime Reports, we find that violent crimes such as homicides and robberies decrease in states that border Mexico after MML are introduced. Second, using Supplementary Homicide Reports' data we show that for homicides the decrease is the result of a drop in drug-law and juvenile-gang related homicides. Lastly, using STRIDE data, we show that the introduction of MML in Mexican border states decreases the amount of cocaine seized, while it increases the price of cocaine. Our results are consis- tent with the theory that decriminalization of small-scale production and distribution of marijuana harms Mexican drug traficking organizations, whose revenues are highly re- liant on marijuana sales. The drop in drug-related crimes suggests that the introduction of MML in Mexican border states lead to a decrease in their activity in those states. Our results survive a large variety of robustness checks. Extrapolating from our results, this indicates that decriminalization of the production and distribution of drugs may lead to a drop in violence in markets where organized crime is pushed out by licit competition

How to Use One Instrument to Identify Two Elasticities

We show that an insight from taxation theory allows identification of both the supply and demand elasticities with only one instrument. Ramsey (1928) and subsequent models of taxation assume that a tax levied on the demand side only affects demand through the price after taxation. Econometrically, we show that this assumption functions as an additional exclusion restriction. Under the Ramsey Exclusion Restriction (RER) a tax reform can serve to simultaneously identify elasticities of supply and demand. We develop a TSLS estimator for both elasticities, a test to assess instrument strength and a test for the RER. Our result extends to a supply-demand system with J goods, and a setting with supply-side or non-linear taxes. Further, we show that key results in the sufficient statistics literature rely on the RER. One example is Harberger’s formula for the excess burden of a tax. We apply our method to the Norwegian labor market

Police officer on the frontline or a soldier? The effect of police militarization on crime

Sparked by high-profile confrontations between police and citizens in Ferguson, Missouri, and elsewhere, many commentators have criticized the excessive militarization of law enforcement. We investigate whether surplus military-grade equipment acquired by local police departments from the Pentagon has an effect on crime rates. We use temporal variations in US military expenditure and between- counties variation in the odds of receiving a positive amount of military aid to identify the causal effect of militarized policing on crime. We find that (i) military aid reduces street-level crime; (ii) the program is cost-effective; and (iii) there is evidence in favor of a deterrence mechanism