Abstract
This paper studies the relationship between immigration and crime in a frictional labor market. Immigration strengthens the labor market in the host country by reducing firms' labor costs. With more immigrants in this labor market, unemployed workers find a job faster, but employed workers receive lower value from their jobs. Therefore, employees commit more crimes, but unemployed workers prefer to stay unemployed. The different criminal behaviors of employed and unemployed workers explain the ambiguity regarding the effects of immigration. A more generous unemployment insurance system for immigrants increases both the unemployment rate and crime rates. An extended duration of incarceration and a deportation policy reduce crime rates but have no significant impact on labor market outcomes.
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