The Storm Before the Calm? Adverse Effects of Tackling Organized Crime

Policies targeted at high‐crime neighbourhoods may have unintended consequences in the presence of organized crime. Whilst they reduce the incentive to commit crime at the margin, those who still choose to join the criminal organization have relatively high criminal propensities. Large organizations take advantage of this, substituting away from membership size towards increased individual criminal activity. Aggregate crime may rise. However, as more would‐be recruits move into the formal labour market, falling revenue causes a reversal of this effect. Thereafter, the policy reduces both size and individual activity simultaneously.