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Crime and the Minimum Wage

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  • Christine Braun

    (University of California Santa Barbara)

Abstract

How does the minimum wage affect crime rates? Empirical research suggests that increasing a worker's wage can deter him from committing crimes. On the other hand, if that worker becomes displaced as a result of the minimum wage, he may be more likely to commit a crime. In this paper, I describe a frictional world in which a worker's criminal actions are linked to his labor market outcomes. I calibrate the model to match the aggregate crime rate and the labor market faced by 16-24 year olds in 1998. Using the calibrated model, I show that the relationship between the aggregate crime rate and the minimum wage is non-monotonic. I test for this non-monotonicity using county level crime data and state level minimum wage changes from 1980 to 2012. The results from the empirical analysis as well as the model suggest that any increase in the federal minimum wage may increase the crime rate as the current wage floor is close the the crime minimizing value.

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  • Christine Braun, 2017. "Crime and the Minimum Wage," 2017 Meeting Papers 359, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:359
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    3. 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.
    4. Pallab K. Ghosh & Gary A. Hoover & Zexuan Liu, 2020. "Do State Minimum Wages Affect the Incarceration Rate?," Southern Economic Journal, John Wiley & Sons, vol. 86(3), pages 845-872, January.
    5. Sinha, Avik & Sengupta, Tuhin, 2020. "Governance Quality and Tourism: Moderation of Social Determinants of Crime," MPRA Paper 102212, University Library of Munich, Germany, revised 2020.
    6. 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).
    7. Mascarúa Lara Miguel A., 2022. "Imperfect Law Enforcement, Informality, and Organized Crime," Working Papers 2022-16, Banco de México.
    8. M. Antonella Mancino, 2022. "A Search Model Of Early Employment Careers And Youth Crime," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 329-390, February.
    9. Otsu, Yuki & Yuen, C.Y. Kelvin, 2022. "Health, crime, and the labor market: Theory and policy analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    10. Griffy, Benjamin & Masters, Adrian, 2022. "Labor market policy in the presence of a participation externality," European Economic Review, Elsevier, vol. 144(C).
    11. 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..
    12. Pengfei Jia & King Yoong Lim & Ali Raza, 2020. "Crime, different taxation, police spending and embodied human capital," Manchester School, University of Manchester, vol. 88(5), pages 664-698, September.
    13. Billy, Alexander & Packard, Michael, 2022. "Crime and the Mariel Boatlift," International Review of Law and Economics, Elsevier, vol. 72(C).
    14. Maham Furqan & Haider Mahmood, 2020. "Does education reduce homicide? A panel data analysis of Asian region," Quality & Quantity: International Journal of Methodology, Springer, vol. 54(4), pages 1197-1209, August.

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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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