Crime, different taxation, police spending and embodied human capital

Pengfei Jia, King Yoong Lim*, Ali Raza

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


We develop a model with crime, embodied human capital, police spending and three different taxation. Based on propositions examined analytically, numerically and empirically using a cross-country panel data on crime, we contribute to the literature by identifying a positive crime-labor income tax nexus and a negative crime-capital income tax nexus. The opposite effect between labor and capital income taxation on crime is novel in the literature. We also document positive association between crime and consumption tax, which suggests that apprehension probability (a proxy for the effectiveness of criminal justice system) is endogenous to fiscal mechanism. These findings have potential policy implications in that, there is a potential role for dedicated tax instruments to be used in supporting conventional crime prevention and deterrence policies.

Original languageEnglish
Pages (from-to)664-698
Number of pages35
JournalManchester School
Issue number5
Publication statusPublished - 1 Sept 2020
Externally publishedYes


  • macroeconomics of crime
  • police spending
  • taxation


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