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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.

Suggested Citation

  • Jeff Grogger, 1997. "Market Wages and Youth Crime," NBER Working Papers 5983, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5983
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    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law

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