An April 2016 Council of Economic Advisers (CEA) report advocated raising the minimum wage to deter crime. This recommendation rests on the assumption that minimum wage hikes increase the returns to legitimate labor market work while generating minimal adverse employment effects. This study comprehensively assesses the impact of minimum wages on crime using data from the 1998-2016 Uniform Crime Reports (UCR), National Incident-Based Reporting System (NIBRS), and National Longitudinal Study of Youth (NLSY). Our results provide no evidence that minimum wage increases reduce crime. Instead, we find that raising the minimum wage increases property crime arrests among those ages 16-to-24, with an estimated elasticity of 0.2. This result is strongest in counties with over 100,000 residents and persists when we use longitudinal data to isolate workers for whom minimum wages bind. Our estimates suggest that a $15 Federal minimum wage could generate criminal externality costs of nearly $2.4 billion.Wonder what the causal mechanism might be.
Wednesday, March 20, 2019
Pay people too much and they commit more crime
Hmmm. Counterintuitive perhaps but the linkage between GDP growth and crime has always been obscure, mediated as it is by cultural norms. From Do Minimum Wage Increases Reduce Crime? by Zachary S. Fone, Joseph J. Sabia, and Resul Cesur. From the Abstract:
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