It is conventionally believed that immigration increases crime rates in the host country. However, empirical results are not in line with this crime concern. We develop a model with endogenous skill upgrading and criminal choices to reconcile the inconsistency.

This paper shows that when Value-at-Risk constrained institutional investors care about their relative standings among the peer group, more risk averse investors would take more risk, which improves the risk sharing and lowers the volatility.