A Search Model of Early Employment Careers and Youth Crime

The school to work transition and the early career path can be di cult for disadvantaged youth. Their labor market is usually studied ignoring the presence of the criminal sector, and yet a large share of them participate in crime. To study these outcomes jointly and explore how they relate, I build and estimate a two-sector search model allowing for a rich set of interactions between the two sectors. I estimate the model using a panel dataset of young o enders, the Pathways to Desistance. Search frictions in the legal labor sector are found to be signi cant, with these individuals being o ered low-quality jobs that are characterized by short durations, low earnings, and large destruction rates. The criminal sector provides an attractive alternative to the legal labor sector, o ering an earnings premium. I nd that there are sizable interactions across sectors, and that policies in one sector can have important implications in the other sector. ∗Email address: [email protected]. I am greatly indebted to my committee members Audra Bowlus, Lance Lochner, Salvador Navarro, and David Rivers for their support and guidance in developing my research. I thank Joseph Mullins and Diego Salazar for helpful discussions and comments. I would also like to thank seminar participants at the University of Western Ontario, and conference participants at the 2017 UM-MSU-UWO Labor Day Conference and the 2016 Canadian Economic Association Annual Meetings. Data used for this project were supported by the National Institute on Drug Abuse through a cooperative agreement that calls for scienti c collaboration between the grantees and the National Institute on Drug Abuse sta . All errors are my own. The latest version is available at https://sites.google.com/view/antonellamancino.