Abstract
This paper analyses the interplay between social structure and information exchange in two competing activities, crime and labor. We consider a dynamic model in which individuals belong to mutually exclusive two-person groups, referred to as dyads. Two individuals belonging to the same dyad hold a strong tie with each other, but each dyad partner can meet other individuals outside the dyad partnership, referred to as weak ties. Individuals learn about crime opportunities either through strong or weak ties and learn about jobs through employment agencies. There are multiple equilibria. If jobs are badly paid and/or crime is profitable, unemployment benefits have to be low enough to prevent workers for staying too long in the unemployment status because they are vulnerable to crime activities while, if people are well paid and/or crime is not profitable, unemployment benefits have to be high enough to induce workers to stay unemployed rather to commit crime because they are less vulnerable to crime activities. Social cohesion favors employment but also knits together delinquents into resilient clusters, and more deterrence effort is needed to reduce crime.