A Socio-Economic Model of Stigma and Related Social Problems.

Recent years have seen a rapid expansion of economic literature on stigma, a notion that had been widely studied in sociology in relation to social deviance. Yet the economic literature overlooks the original sociological intuition that certain consequences of stigmatization could be socially indefficient. This paper formalizaes this intuition by developing a model of community behavior, which mimics a classic sociological setting concerning the rehabilitation of a former criminal offender. The conditions under which a socially inefficient equilibrium arises are derived. Some of those conditions are shown to be consistent with the findings from micro-labour studies on crime.