IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/v14y2014i3p23n20.html
   My bibliography  Save this article

The Minimum Wage and Crime

Author

Listed:
  • Beauchamp Andrew

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

  • Chan Stacey

    (Analysis Group, Denver, CO, USA)

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.

Suggested Citation

  • Beauchamp Andrew & Chan Stacey, 2014. "The Minimum Wage and Crime," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(3), pages 1-23, July.
    • Handle: RePEc:bpj:bejeap:v:14:y:2014:i:3:p:23:n:20
    DOI: 10.1515/bejeap-2013-0130
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejeap-2013-0130
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejeap-2013-0130?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Richard V. Burkhauser & Kenneth A. Couch & David C. Wittenburg, 2000. "Who Minimum Wage Increases Bite: An Analysis Using Monthly Data from the SIPP and the CPS," Southern Economic Journal, John Wiley & Sons, vol. 67(1), pages 16-40, July.
    2. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    3. Joseph J. Sabia & Richard V. Burkhauser & Benjamin Hansen, 2012. "Are the Effects of Minimum Wage Increases Always Small? New Evidence from a Case Study of New York State," ILR Review, Cornell University, ILR School, vol. 65(2), pages 350-376, April.
    4. Brian A. Jacob & Lars Lefgren, 2003. "Are Idle Hands the Devil's Workshop? Incapacitation, Concentration, and Juvenile Crime," American Economic Review, American Economic Association, vol. 93(5), pages 1560-1577, December.
    5. Ahn, Tom & Arcidiacono, Peter & Wessels, Walter, 2011. "The Distributional Impacts of Minimum Wage Increases When Both Labor Supply and Labor Demand Are Endogenous," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(1), pages 12-23.
    6. Hashimoto, Masanori, 1987. "The Minimum Wage Law and Youth Crimes: Time-series Evidence," Journal of Law and Economics, University of Chicago Press, vol. 30(2), pages 443-464, October.
    7. Jeffrey P. Thompson, 2009. "Using Local Labor Market Data to Re-Examine the Employment Effects of the Minimum Wage," ILR Review, Cornell University, ILR School, vol. 62(3), pages 343-366, April.
    8. Janet Currie & Bruce C. Fallick, 1996. "The Minimum Wage and the Employment of Youth Evidence from the NLSY," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 404-428.
    9. Chaplin, Duncan D. & Turner, Mark D. & Pape, Andreas D., 2003. "Minimum wages and school enrollment of teenagers: a look at the 1990's," Economics of Education Review, Elsevier, vol. 22(1), pages 11-21, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Riccardo Ciacci, 2023. "On the economic determinants of prostitution: marriage compensation and unilateral divorce in U.S. states," Review of Economics of the Household, Springer, vol. 21(3), pages 941-1017, September.
    2. Christine Braun, 2019. "Crime and the minimum wage," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 32, pages 122-152, April.
    3. Bjørnskov, Christian, 2015. "Does economic freedom really kill? On the association between ‘Neoliberal’ policies and homicide rates," European Journal of Political Economy, Elsevier, vol. 37(C), pages 207-219.
    4. Fone, Zachary S. & Sabia, Joseph J. & Cesur, Resul, 2023. "The unintended effects of minimum wage increases on crime," Journal of Public Economics, Elsevier, vol. 219(C).
    5. Amanda Y. Agan & Michael D. Makowsky, 2018. "The Minimum Wage, EITC, and Criminal Recidivism," Working Papers 616, Princeton University, Department of Economics, Industrial Relations Section..
    6. Eric Melander & Martina Miotto, 2023. "Welfare Cuts and Crime: Evidence from the New Poor Law," The Economic Journal, Royal Economic Society, vol. 133(651), pages 1248-1264.
    7. David Neumark, 2023. "The Effects of Minimum Wages on (Almost) Everything? A Review of Recent Evidence on Health and Related Behaviors," NBER Working Papers 31191, National Bureau of Economic Research, Inc.
    8. Zachary S. Fone & Joseph J. Sabia & Resul Cesur, 2019. "Do Minimum Wage Increases Reduce Crime?," NBER Working Papers 25647, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    2. Fone, Zachary S. & Sabia, Joseph J. & Cesur, Resul, 2023. "The unintended effects of minimum wage increases on crime," Journal of Public Economics, Elsevier, vol. 219(C).
    3. David Neumark & Peter Shirley, 2021. "Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States?," NBER Working Papers 28388, National Bureau of Economic Research, Inc.
    4. Jonathan Meer & Jeremy West, 2016. "Effects of the Minimum Wage on Employment Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 500-522.
    5. Smith, Alexander A., 2021. "The minimum wage and teen educational attainment," Labour Economics, Elsevier, vol. 73(C).
    6. Zachary S. Fone & Joseph J. Sabia & Resul Cesur, 2019. "Do Minimum Wage Increases Reduce Crime?," NBER Working Papers 25647, National Bureau of Economic Research, Inc.
    7. Clemens, Jeffrey & Wither, Michael, 2019. "The minimum wage and the Great Recession: Evidence of effects on the employment and income trajectories of low-skilled workers," Journal of Public Economics, Elsevier, vol. 170(C), pages 53-67.
    8. Richard V. Burkhauser & Joseph J. Sabia, 2007. "The Effectiveness Of Minimum‐Wage Increases In Reducing Poverty: Past, Present, And Future," Contemporary Economic Policy, Western Economic Association International, vol. 25(2), pages 262-281, April.
    9. Joseph J. Sabia & Richard V. Burkhauser & Benjamin Hansen, 2012. "Are the Effects of Minimum Wage Increases Always Small? New Evidence from a Case Study of New York State," ILR Review, Cornell University, ILR School, vol. 65(2), pages 350-376, April.
    10. Guido Blasio & Samuele Poy, 2017. "THE IMPACT OF LOCAL WAGE REGULATION ON EMPLOYMENT: A BORDER ANALYSIS FROM ITALY IN THE 1950s," Journal of Regional Science, Wiley Blackwell, vol. 57(1), pages 48-74, January.
    11. José Azar & Emiliano Huet-Vaughn & Ioana Marinescu & Bledi Taska & Till von Wachter, 2019. "Minimum Wage Employment Effects and Labor Market Concentration," NBER Working Papers 26101, National Bureau of Economic Research, Inc.
    12. Anderson, D. Mark & Hansen, Benjamin & Walker, Mary Beth, 2013. "The minimum dropout age and student victimization," Economics of Education Review, Elsevier, vol. 35(C), pages 66-74.
    13. David Neumark, 2019. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," German Economic Review, Verein für Socialpolitik, vol. 20(3), pages 293-329, August.
    14. Lordan, Grace & Neumark, David, 2018. "People versus machines: The impact of minimum wages on automatable jobs," Labour Economics, Elsevier, vol. 52(C), pages 40-53.
    15. Lordan, Grace & Neumark, David, 2017. "People versus machines: the impact of minimum wages on automatable," LSE Research Online Documents on Economics 84060, London School of Economics and Political Science, LSE Library.
    16. Horst Feldmann, 2005. "Labour Market Institutions and Labour Market Performance in Transition Countries," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 47-82.
    17. David Neumark & Olena Nizalova, 2007. "Minimum Wage Effects in the Longer Run," Journal of Human Resources, University of Wisconsin Press, vol. 42(2).
    18. Doruk Cengiz & Arindrajit Dube & Attila S. Lindner & David Zentler-Munro, 2021. "Seeing Beyond the Trees: Using Machine Learning to Estimate the Impact of Minimum Wages on Labor Market Outcomes," NBER Working Papers 28399, National Bureau of Economic Research, Inc.
    19. Edo, Anthony & Rapoport, Hillel, 2019. "Minimum wages and the labor market effects of immigration," Labour Economics, Elsevier, vol. 61(C).
    20. Michele Campolieti & Morley Gunderson & Byron Lee, 2014. "Minimum Wage Effects On Permanent Versus Temporary Minimum Wage Employment," Contemporary Economic Policy, Western Economic Association International, vol. 32(3), pages 578-591, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:14:y:2014:i:3:p:23:n:20. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.