IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/17605.html
   My bibliography  Save this paper

Skill-biased Technological Change, Earnings of Unskilled Workers, and Crime

Author

Listed:
  • Naci H. Mocan
  • Bulent Unel

Abstract

This paper investigates the impact of unskilled workers' earnings on crime. Following the literature on wage inequality and skill-biased technological change, we employ CPS data to create state-year as well as state-year-and (broad) industry specific measures of skill-biased technological change, which are then used as instruments for unskilled workers' earnings in crime regressions. Regressions that employ state panels reveal that technology-induced variations in unskilled workers' earnings impact property crime with an elasticity of -1, but that wages have no impact on violent crime. The paper also estimates, for the first time in this literature, structural crime equations using micro panel data from NLSY97 and instrumenting real wages of young workers. Using state-year-industry specific technology shocks as instruments yields elasticities that are in the neighborhood of -2 for most types of crime, which is markedly larger than previous estimates. In both data sets there is evidence for asymmetric impact of unskilled workers' earnings on crime. A decline in earnings has a larger effect on crime in comparison to an increase in earnings by the same absolute value.

Suggested Citation

  • Naci H. Mocan & Bulent Unel, 2011. "Skill-biased Technological Change, Earnings of Unskilled Workers, and Crime," NBER Working Papers 17605, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17605
    Note: CH EH LE LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w17605.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mirko Draca & Stephen Machin & Robert Witt, 2011. "Panic on the Streets of London: Police, Crime, and the July 2005 Terror Attacks," American Economic Review, American Economic Association, vol. 101(5), pages 2157-2181, August.
    2. Raphael, Steven & Winter-Ember, Rudolf, 2001. "Identifying the Effect of Unemployment on Crime," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 259-283, April.
    3. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 705-746.
    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. Gronau, Reuben, 1977. "Leisure, Home Production, and Work-The Theory of the Allocation of Time Revisited," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1099-1123, December.
    6. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555, Elsevier.
    7. Antonio Ciccone & Giovanni Peri, 2005. "Long-Run Substitutability Between More and Less Educated Workers: Evidence from U.S. States, 1950-1990," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 652-663, November.
    8. Steinberg, Dan, 1989. "Induced work participation and the returns to experience for welfare women : Evidence from a social experiment," Journal of Econometrics, Elsevier, vol. 41(3), pages 321-340, July.
    9. Julie Berry Cullen & Steven D. Levitt, 1999. "Crime, Urban Flight, And The Consequences For Cities," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 159-169, May.
    10. Eric D. Gould & Bruce A. Weinberg & David B. Mustard, 2002. "Crime Rates And Local Labor Market Opportunities In The United States: 1979-1997," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 45-61, February.
    11. Jaeger, David A, 1997. "Reconciling the Old and New Census Bureau Education Questions: Recommendations for Researchers," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 300-309, July.
    12. Giovanni Peri, 2016. "The Effect Of Immigration On Productivity: Evidence From U.S. States," World Scientific Book Chapters, in: The Economics of International Migration, chapter 8, pages 265-275, World Scientific Publishing Co. Pte. Ltd..
    13. Raphael, Steven & WINTER-EBMER, RUDOLF, 1998. "Identifying the Effect of Unemployment on Crime," University of California at San Diego, Economics Working Paper Series qt5hb4h56g, Department of Economics, UC San Diego.
    14. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1055-1089.
    15. David H. Autor & Alan Manning & Christopher L. Smith, 2016. "The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 58-99, January.
    16. H. Naci Mocan & Hope Corman, 2000. "A Time-Series Analysis of Crime, Deterrence, and Drug Abuse in New York City," American Economic Review, American Economic Association, vol. 90(3), pages 584-604, June.
    17. Mirko Draca & Stephen Machin, 2015. "Crime and Economic Incentives," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 389-408, August.
    18. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-791, October.
    19. Kirstine Hansen & Stephen Machin, 2002. "Spatial Crime Patterns and the Introduction of the UK Minimum Wage," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(supplemen), pages 677-697, December.
    20. H. Naci Mocan & Turan G. Bali, 2010. "Asymmetric Crime Cycles," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 899-911, November.
    21. repec:bla:obuest:v:64:y:2002:i:s1:p:677-697 is not listed on IDEAS
    22. David S. Lee, 1999. "Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 977-1023.
    23. Lance Lochner, 2004. "Education, Work, And Crime: A Human Capital Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 811-843, August.
    24. Francesco Caselli & Wilbur John Coleman II, 2006. "The World Technology Frontier," American Economic Review, American Economic Association, vol. 96(3), pages 499-522, June.
    25. Anna Öster & Jonas Agell, 2007. "Crime and Unemployment in Turbulent Times," Journal of the European Economic Association, MIT Press, vol. 5(4), pages 752-775, June.
    26. David Orr, 1999. "Book," Journal of Industrial Ecology, Yale University, vol. 3(4), pages 155-156, October.
    27. Steven D. Levitt, 1998. "Juvenile Crime and Punishment," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1156-1185, December.
    28. John Ermisch & Robert Wright, 1994. "Interpretation of negative sample selection effects in wage offer equations," Applied Economics Letters, Taylor & Francis Journals, vol. 1(11), pages 187-189.
    29. Claudia Goldin & Lawrence F. Katz, 2007. "Long-Run Changes in the Wage Structure: Narrowing, Widening, Polarizing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 38(2), pages 135-168.
    30. Unel, Bulent, 2010. "Analyzing skilled and unskilled labor efficiencies in the US," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 957-967, December.
    31. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
    32. Thomas Lemieux, 2006. "Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?," American Economic Review, American Economic Association, vol. 96(3), pages 461-498, June.
    33. repec:bla:obuest:v:64:y:2002:i:0:p:677-97 is not listed on IDEAS
    34. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
    35. Rafael Di Tella & Ernesto Schargrodsky, 2004. "Do Police Reduce Crime? Estimates Using the Allocation of Police Forces After a Terrorist Attack," American Economic Review, American Economic Association, vol. 94(1), pages 115-133, March.
    36. Jenny Williams & Robin C. Sickles, 2002. "An Analysis of the Crime as Work Model: Evidence from the 1958 Philadelphia Birth Cohort Study," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 479-509.
    37. Ming-Jen Lin, 2008. "Does Unemployment Increase Crime?: Evidence from U.S. Data 1974–2000," Journal of Human Resources, University of Wisconsin Press, vol. 43(2), pages 413-436.
    38. Wright, Robert E & Ermisch, John F, 1991. "Gender Discrimination in the British Labour Market: A Reassessment," Economic Journal, Royal Economic Society, vol. 101(406), pages 508-522, May.
    39. 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.
    40. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1169-1213.
    41. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-565, May-June.
    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. Stephen Machin & Olivier Marie & Sunčica Vujić, 2012. "Youth Crime and Education Expansion," German Economic Review, Verein für Socialpolitik, vol. 13(4), pages 366-384, November.
    2. Csapó, Gergely & Müller, Rudolf, 2013. "Optimal mechanism design for the private supply of a public good," Games and Economic Behavior, Elsevier, vol. 80(C), pages 229-242.
    3. William Harbaugh & Naci Mocan & Michael Visser, 2013. "Theft and Deterrence," Journal of Labor Research, Springer, vol. 34(4), pages 389-407, December.
    4. Steve Brito & Ana Corbacho & Rene Osorio Rivas, 2014. "Remittances and the Impact on Crime in Mexico," IDB Publications (Working Papers) 85093, Inter-American Development Bank.
    5. 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.
    6. Laura Jaitman, 2019. "Frontiers in the economics of crime: lessons for Latin America and the Caribbean," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-36, December.
    7. Mocan, Naci & Raschke, Christian & Unel, Bulent, 2015. "The impact of mothers’ earnings on health inputs and infant health," Economics & Human Biology, Elsevier, vol. 19(C), pages 204-223.

    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. Altindag, Duha T., 2012. "Crime and unemployment: Evidence from Europe," International Review of Law and Economics, Elsevier, vol. 32(1), pages 145-157.
    2. Satadru Das & Naci Mocan, 2020. "Analyzing The Impact Of The World'S Largest Public Works Project On Crime," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1167-1182, July.
    3. Siwach, Garima, 2018. "Unemployment shocks for individuals on the margin: Exploring recidivism effects," Labour Economics, Elsevier, vol. 52(C), pages 231-244.
    4. Gaurav Khanna & Carlos Medina & Anant Nyshadham & Jorge Tamayo & Nicolas Torres, 2023. "Formal Employment and Organised Crime: Regression Discontinuity Evidence from Colombia," The Economic Journal, Royal Economic Society, vol. 133(654), pages 2427-2448.
    5. Mustard, David B., 2010. "How Do Labor Markets Affect Crime? New Evidence on an Old Puzzle," IZA Discussion Papers 4856, Institute of Labor Economics (IZA).
    6. Ochsen, Carsten, 2010. "Crime and labor market policy in Europe," International Review of Law and Economics, Elsevier, vol. 30(1), pages 52-61, March.
    7. 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).
    8. Nordin , Martin, 2014. "Does Eligibility for Tertiary Education Affect Crime Rates? Quasi-Experimental Evidence," Working Papers 2014:14, Lund University, Department of Economics.
    9. Paolo Buonanno & Giovanni Mastrobuoni, 2012. "Police and Crime: Evidence from Dictated Delays in Centralized Police Hiring," Carlo Alberto Notebooks 244, Collegio Carlo Alberto.
    10. Bignon, Vincent & Caroli, Eve & Galbiati, Roberto, 2011. "Stealing to Survive: Crime and Income Shocks in 19th Century France," CEPREMAP Working Papers (Docweb) 1111, CEPREMAP, revised Feb 2013.
    11. Deiana, C, 2016. "Local Labour Market Effects of Unemployment on Crime Induced by Trade Shocks," Economics Discussion Papers 16529, University of Essex, Department of Economics.
    12. Denis Fougère & Francis Kramarz & Julien Pouget, 2009. "Youth Unemployment and Crime in France," Journal of the European Economic Association, MIT Press, vol. 7(5), pages 909-938, September.
    13. Povilas Lastauskas & Eirini Tatsi, 2017. "Spatial Nexus in Crime and Unemployement in Times of Crisis," Bank of Lithuania Working Paper Series 39, Bank of Lithuania.
    14. David B. Mustard, 2010. "Labor Markets and Crime: New Evidence on an Old Puzzle," Chapters, in: Bruce L. Benson & Paul R. Zimmerman (ed.), Handbook on the Economics of Crime, chapter 14, Edward Elgar Publishing.
    15. Jens Ruhose, 2015. "Microeconometric Analyses on Economic Consequences of Selective Migration," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 61.
    16. Naci Mocan & Kaj Gittings, 2010. "The Impact of Incentives on Human Behavior: Can We Make it Disappear? The Case of the Death Penalty," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 379-418, National Bureau of Economic Research, Inc.
    17. Corvalan, Alejandro & Pazzona, Matteo, 2019. "Persistent commodity shocks and transitory crime effects," Journal of Economic Behavior & Organization, Elsevier, vol. 158(C), pages 110-127.
    18. O’Flaherty, Brendan & Sethi, Rajiv, 2015. "Urban Crime," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1519-1621, Elsevier.
    19. Kangoh Lee, 2018. "Unemployment and crime: the role of apprehension," European Journal of Law and Economics, Springer, vol. 45(1), pages 59-80, February.
    20. Milo Bianchi & Paolo Buonanno & Paolo Pinotti, 2012. "Do Immigrants Cause Crime?," Journal of the European Economic Association, European Economic Association, vol. 10(6), pages 1318-1347, December.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:nbr:nberwo:17605. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    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.