We analyze a unique data set detailing the financial activities of a drug-selling street gang on a monthly basis over a four-year period in the recent past. The data, originally compiled by the gang leader to aid in managing the organization, contain detailed information on both the sources of revenues (e.g. drug sales, extortion) and expenditures (e.g costs of drugs sold, weapons, tribute to the central gang organization, wages paid to various levels of the gang). Street-level drug dealing appears to be less lucrative than is generally thought. We estimate the average wage in the organization to rise from roughly $6 per hour to $11 per hour over the time period studied. The distribution of wages, however, is extremely skewed. Gang leaders earn far more than they could in the legitimate sector, but the actual street-level dealers appear to earn less than the minimum wage throughout most of our sample, in spite of the substantial risks associated with such activities (the annual violent death rate in our sample is 0.07). There is some evidence consistent both with compensating differentials and efficiency wages. The markup on drugs suggests that the gang has substantial local market power. Gang wars appear to have an important strategic component: violence on another gang’s turf shifts demand away from that area. The gang we observe responds to such attacks by pricing below marginal cost, suggesting

Theoretical models of self-employment posit that attitudes toward risk, entrepreneurial ability, and preferences for autonomy are central to the individual's decision between selfemployment and wage/salary work. None of the studies in the rapidly growing empirical literature on self-employment, however, have been able to test whether these factors are important determinants of self-employment. I explore this hypothesis by examining the relationship between drug dealing and legitimate self-employment. A review of ethnographic studies in the criminology literature indicates that drug dealing represents a good proxy for low risk aversion, entrepreneurial ability, and a preference for autonomy. The 1980 wave of the National Longitudinal Survey of Youth (NLSY) contained a special section on participation in illegal activities, including questions on selling marijuana and other "hard " drugs. I use the answers to these questions and data from subsequent years of the NLSY to examine the relationship between drug dealing as a youth and legitimate selfemployment in later years. Using various definitions of drug dealing and specifications of the econometric model, I find that drug dealers are 11 to 21 percent more likely to choose selfemployment than non drug dealers, all else equal. I also find that drug dealers who sold more frequently, used drugs less frequently, or reported receiving income from drug dealing are more likely to choose self-employment than other drug dealers. I interpret these results as providing evidence that low risk aversion, entrepreneurial ability, and a preference for autonomy are important determinants of self-employment. I also provide evidence against a few alternative explanations of the positive relationship between drug dealing and self-employment

Employment programs for disadvantaged male youth have been suggested as a possible new weapon in America’s War on Drugs. In this paper panel data at the neighborhood level are used to investigate the relationship between drug crime and young males ’ intra-urban job accessibility. Results obtained for models that control for time and fixed effects, as well as other potential sources of bias, suggest that modest improvements in job access can substantially reduce the amount of drug crime within poor neighborhoods. 1 I.

This monograph is based on the papers and discussion from a technical review on “Drugs and Violence ” held on September 25 and 26, 1989, in Rockville, MD. The review meeting was sponsored by the Office of Science and the Division of Epidemiology and Prevention Research, National Institute on Drug Abuse.

The author(s) shown below used Federal funds provided by the U.S. Department of Justice and prepared the following final report: Document Title: Author:

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jointly by the University of Chicago economist Steven Levitt and New York Times journalist and author Stephen Dubner (Confessions of a Hero-Worshiper and Turbulent Souls: A Catholic Son’s Return to his Jewish Family), the book has appeared on best seller lists internationally and has occupied the New York Times Best Sellers list for

I am grateful for critical readings of this paper

United States prisons release more than 600,000 individuals each year. Within three years of release, 50 percent of released prisoners are back in prison. Work release has the potential to serve as a structured re-entry into the mainstream labor market. In an economic model of crime, an improvement in legal labor market opportunities should reduce criminal activity. After using a variety of econometric techniques to address the non-random selection of inmates into work release, I find that inmates who participate in work release have better post-prison employment outcomes. While the unconditional estimates suggest a large positive labor market effect for three years following release, the various corrections for selection leave some doubt about the duration of a work release treatment. I also find that the labor market gains do not necessarily translate into reduced recidivism. The reduction in recidivism is dependent on the types of crimes offenders committed. Better labor market opportunities reduce recidivism for those convicted of income generating offenses, but have no impact on offenders who committed non-economically motivated crimes.

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