The Minimum Wage and Crime : The B.E. Journal of Economic Analysis & Policy

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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Zulehner, Christine / Schirle, Tammy


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The Minimum Wage and Crime

1Department of Economics, Boston College, 140 Commonwealth Ave, Chestnut Hill, MA 02467, USA

2Analysis Group, Denver, CO, USA

Citation Information: The B.E. Journal of Economic Analysis & Policy. Volume 14, Issue 3, Pages 1213–1235, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: 10.1515/bejeap-2013-0130, February 2014

Publication History

Published Online:
2014-02-04

Abstract

Does crime respond to changes in the minimum wage? A growing body of empirical evidence indicates that increases in the minimum wage have a displacement effect on low-skilled workers. Economic reasoning provides the possibility that disemployment may cause youth to substitute from legal work to crime. However, there is also the countervailing effect of a higher wage raising the opportunity cost of crime for those who remain employed. We use the National Longitudinal Survey of Youth 1997 cohort to measure the effect of increases in the minimum wage on self-reported criminal activity and examine employment–crime substitution. Exploiting changes in state and federal minimum wage laws from 1997 to 2010, we find that workers who are affected by a change in the minimum wage are more likely to commit crime, become idle, and lose employment. Individuals experiencing a binding minimum wage change were more likely to commit crime and work only part time. Analyzing heterogeneity shows those with past criminal connections are especially likely to see decreased employment and increased crime following a policy change, suggesting that reduced employment effects dominate any wage effects. The findings have implications for policy regarding both the low-wage labor market and efforts to deter criminal activity.

Keywords: minimum wage; crime; unemployment

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