Human capital formation and criminal behavior: The role of early childhood education

This paper develops an overlapping generations model of criminal behavior, which extends prior research on crime by taking into account parental decisions about their children's education and about sending them to school when they become adolescents. Additionally, it is also assumed that acquired ability in childhood and school resources interplay to determine the student's probability of leaving school before graduation. Therefore, considering that dropping out of school and criminality are endogenously determined by the quality of early childhood education, school inputs and law enforcement parameters, this paper offers a framework to study the effects of interventions in early education on criminality and human capital accumulation vis-à-vis enhancing school resources and public spending on enforcement. Numerical simulations show that stimuli to increase investments in the education of children from disadvantaged families are much more cost-effective as a crime-prevention policy than expenditures on school resources and police protection.