Department
Economics, Finance and Quantitative Analysis
Document Type
Article
Publication Date
11-20-2015
Abstract
We examine the relationship between the incidence of workplace deviance (on-the-job crime) and the state of the economy. A worker's probability of future employment depends on whether she has been deviant as well as on the availability of jobs. Using a two period model we show that the net impact on deviant behavior to changes in unemployment can go either way depending upon the nature of the equilibrium. Two kinds of equilibria are possible. In one, a non-deviant's probability of being employed increases as expected market conditions improve which lowers the incentive to be a deviant. In contrast, in the other kind of equilibrium, the deviant's probability of being employed increases when market conditions improve which increases the incentive to be a deviant. In either case, there is a setup cost to deviant behavior and the attractiveness of incurring that increases with an increase in expected probability of future employment which unambiguously increases the incentive to be deviant. In the first kind of equilibrium, the two effects counteract each other, while in the second they reinforce each other. Finally, we show that an increase in optimism, i.e. a reduction in the probability of facing a recession unambiguously increases deviant behavior.
Journal Title
The B.E. Journal of Theoretical Economics
Journal ISSN
1935-1704
Volume
16
Issue
1
First Page
47
Last Page
81
Digital Object Identifier (DOI)
10.2139/ssrn.2178719