An Economic Analysis of a Drug-Selling Gang's Finances

Abstract

Street gangs have a long history in American cities (Thrasher 1927). Until recently, gangs were organized primarily as social peer groups. Any economic activities were of secondary importance (Suttles 1968, Klein 1995). The last two decades, however, have given rise to a dramatic transformation in street gangs, or what Taylor (1990) terms their "corporatization." When crack became widely available in the mid-1980s, sold in small quantities in fragmented street-corner markets, street gangs became the logical distributors. The potential profit in drug dealing dwarfed that previously available to gangs through other criminal channels. As a consequence, the economic activity of drug distribution quickly emerged as the focus around which many gangs are organized. In concert with declining legitimate labor market opportunities and increasing concentrations of poverty in inner cities (Wilson 1987), the new economic underpinning of street gangs has led to a dramatic increase in gang involvement. Landre. Miller, and Porter (1997) estimate that the number of individuals associated with street gangs in California alone is projected to reach 250,000 by the year 2000, although this number includes not only hardcore gang members involved directly in drug distribution, but also those on the periphery. The timing of the rise in gang activity corresponds to a period of rising inner-city youth violence. Between 1985 and 1995, the homicide arrest rate among those aged 13 to 17 doubled (Blumstein 1995, Cook and Laub 1997). Increases among African-American youths were particularly great, more than tripling (to a level five times higher than whites). In stark contrast, the adult homicide arrest rate fell over this period. Inner-city communities have also seen a divergence in male and female performance along a number of other dimensions (Wilson 1987). Whether the rise in gangs play a causal role in these trends, or are perhaps caused by these

Crime, Employment and Social Welfare: An Individual-Level Study on Disadvantaged Males

“…Very few had employment for the entire observation period. The employment rate is similar compared to other studies where high risk offenders are analyzed (e.g., Grogger, 1995;Levitt & Venkatesh, 2001). The majority of the employment is characterized as regular 23.2 %, while 8.7% is obtained via temporary job agencies.…”

Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data

“…7 The full text of the online Appendix to Mironov (2013) is available at http://onlinelibrary.wiley.com/ doi/10.1111/jofi.12026/suppinfo (accessed on November 24, 2014). 8 The use of the banking transactions data has some methodological parallels with using other unconventional data sources to provide empirical evidence on the questions that cannot be studied using conventional data (e.g., Levitt and Venkatesh 2000;Guriev and Rachinsky 2006;Braguinsky and Mityakov forthcoming;Braguinsky, Mityakov, and Liscovich 2011;Mironov 2015). Much of this work focuses on Russia because of data availability.…”

The Financial Management of the Illicit Tobacco Trade in the United Kingdom

“…In the UK alone, for example, the Home Office (2007) estimates the annual revenue derived from organised crime at more than £11 billion, while the attendant economic and social costs are close to £25 billion. However, despite the apocalyptic tone of these discourses, which are primarily based on estimations of crime-money constructed by using dubious methodologies and extrapolations from economic models (see van Duyne, 1994), as well as the fact that asset recovery has become a priority for policy-makers and law enforcement agencies internationally (Levi and Osofsky, 1995;Brown et al, 2012;FATF, 2012;NCA, 2015), research on the financial management in illegal markets and other manifestations of 'organised crime' is limited (see Levitt and Venkatesh, 2000), with the drug market in specific contexts being perhaps the exception (see Reuter et al, 1990;Naylor, 2004;Brå, 2007;Skinnari, 2010). Although there is a relatively sound understanding of finance-related issues in the drug markets, with an emphasis on prices, costs of doing business (Caulkins et al, 1999;Moeller, 2012), investments and money laundering, not much is known about other illegal markets (cf.…”