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In this dissertation, I investigate how government policies influence an individual's decision to search for and accept a job and/or crime opportunity.
Chapter 1 looks at how long it takes for released inmates to find a job, and when they find a job, how their incarceration rate changes. The purpose is to predict the effects of a successful job placement program. An on-the-job search model with crime is used to model criminal behavior, derive the estimation method and analyze different types of policies. The results show the unemployed are incarcerated twice as fast as the employed and take on average four and a half months to find a job. Combining these results, it is demonstrated that reducing the average unemployment spell of criminals by two months reduces crime and recidivism by more than five percent.
Chapter 2 incorporates crime into a search and matching model of the labor market. All workers, irrespective of their labor force status can commit crimes and the employment contract is determined optimally. The model is used to study, analytically and quantitatively, the effects of various labor market and crime policies such as unemployment insurance, hiring subsidies and the duration of jail sentences. For example, wage subsidies reduce unemployment, the crime rates of employed and unemployed workers, and improve society's welfare.
Chapter 3 investigates a market where wholesalers search for retailers and retailers search for consumers. I show how the timing, targets and types of anti-drug policies matter. For instance, supply falls if the likelihood of apprehension rises when a network is established. Alternatively, if the cost of apprehension rises for wholesale dealers when a network is searching for consumers, then revenue sharing is distorted. Such a distortion will increase retail profits and aggregate supply. As an application, the model provides an alternative explanation for why the United States cocaine market saw rising consumption and falling prices during the 1980's. Specifically, the ``War on Drugs" distorted the cocaine market and increased supply.