Crime does pay (at least when it’s violent)!– On the compensating wage differentials of high regional crime levels
AbstractThis paper investigates whether high regional crime levels lead to a compensating wage differential paid by firms in the respective region. Using data from German social security records and official police statistics for 2003 to 2006, we consider both violent and non-violent crimes and use three-way error-components estimators to control for individual and regional heterogeneity. Our findings suggest a positive and rather large compensating differential for the risk of falling victim to a violent crime while no such effect exists for other criminal activities. However, our results also suggest that the wage effects for most individuals are rather small due to small variation in the crime rates.
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Bibliographic InfoPaper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 91.
Length: 27 pages
Date of creation: 21 Jul 2008
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Compensating wage differentials; crime; three-way error-components model;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-30 (All new papers)
- NEP-GEO-2008-07-30 (Economic Geography)
- NEP-LAB-2008-07-30 (Labour Economics)
- NEP-URE-2008-07-30 (Urban & Real Estate Economics)
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