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Market Wages and Youth Crime

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  • Jeff Grogger

Abstract

Youth crime is widespread. To study the effect of market wages on youth crime, I analyze a time-allocation model in which consumers face parametric wages and diminishing marginal returns to crime. Under these assumptions, an individual who works will commit crime if the returns to the first hour of crime exceed his market wage. This decision rule imposes considerable structure on the econometric model, which I estimate using data from the National Longitudinal Survey Youth Cohort. The empirical model provides estimates of the determinants of criminal returns and of the wage responsiveness of criminal participation. Young men's behavior appears to be very responsive to price incentives. My estimates suggest that falling real wages may have been an important determinant of rising youth crime over the past two decades. Moreover, wages explain an important component of the racial differential in criminal participation, and they largely explain the age distribution of crime.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5983.

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Date of creation: Mar 1997
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Publication status: published as Journal of Labor Economics, Vol. 16, no. 4 (October 1998): 756-791
Handle: RePEc:nbr:nberwo:5983

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  1. Reuben Gronau, 1976. "Leisure, Home Production and Work--The Theory of The Allocation of Time Revisited," NBER Working Papers 0137, National Bureau of Economic Research, Inc.
  2. Fishe, Raymond P. H. & Trost, R. P. & Lurie, Philip M., 1981. "Labor force earnings and college choice of young women: An examination of selectivity bias and comparative advantage," Economics of Education Review, Elsevier, Elsevier, vol. 1(2), pages 169-191, April.
  3. John Bound & Richard B. Freeman, 1991. "What Went Wrong? The Erosion of Relative Earnings and Employment Among Young Black Men in the 1980s," NBER Working Papers 3778, National Bureau of Economic Research, Inc.
  4. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  5. Amemiya, Takeshi, 1978. "The Estimation of a Simultaneous Equation Generalized Probit Model," Econometrica, Econometric Society, Econometric Society, vol. 46(5), pages 1193-1205, September.
  6. Helen V. Tauchen & Ann Dryden Witte & Harriet Griesinger, 1988. "Deterrence, Work and Crime: Revisiting the Issues with Birth Cohort Data," NBER Working Papers 2508, National Bureau of Economic Research, Inc.
  7. Witte, Ann Dryden, 1980. "Estimating the Economic Model of Crime with Individual Data," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 94(1), pages 57-84, February.
  8. Wolpin, Kenneth I, 1980. "A Time Series-Cross Section Analysis of International Variation in Crime and Punishment," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 417-23, August.
  9. Lemieux, Thomas & Fortin, Bernard & Frechette, Pierre, 1994. "The Effect of Taxes on Labor Supply in the Underground Economy," American Economic Review, American Economic Association, American Economic Association, vol. 84(1), pages 231-54, March.
  10. K. Newey, Whitney, 1985. "Generalized method of moments specification testing," Journal of Econometrics, Elsevier, Elsevier, vol. 29(3), pages 229-256, September.
  11. Grogger, Jeffrey, 1991. "Certainty vs. Severity of Punishment," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 29(2), pages 297-309, April.
  12. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(3), pages 521-65, May-June.
  13. Sjoquist, David Lawrence, 1973. "Property Crime and Economic Behavior: Some Empirical Results," American Economic Review, American Economic Association, American Economic Association, vol. 63(3), pages 439-46, June.
  14. Richard B. Freeman, 1991. "Crime and the Employment of Disadvantaged Youths," NBER Working Papers 3875, National Bureau of Economic Research, Inc.
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