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The Minimum Wage and Crime

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  • Beauchamp Andrew

    (Department of Economics, Boston College, 140 Commonwealth Ave, Chestnut Hill, MA 02467, USA)

  • Chan Stacey

    (Analysis Group, Denver, CO, USA)

Abstract

Does crime respond to changes in the minimum wage? A growing body of empirical evidence indicates that increases in the minimum wage have a displacement effect on low-skilled workers. Economic reasoning provides the possibility that disemployment may cause youth to substitute from legal work to crime. However, there is also the countervailing effect of a higher wage raising the opportunity cost of crime for those who remain employed. We use the National Longitudinal Survey of Youth 1997 cohort to measure the effect of increases in the minimum wage on self-reported criminal activity and examine employment–crime substitution. Exploiting changes in state and federal minimum wage laws from 1997 to 2010, we find that workers who are affected by a change in the minimum wage are more likely to commit crime, become idle, and lose employment. Individuals experiencing a binding minimum wage change were more likely to commit crime and work only part time. Analyzing heterogeneity shows those with past criminal connections are especially likely to see decreased employment and increased crime following a policy change, suggesting that reduced employment effects dominate any wage effects. The findings have implications for policy regarding both the low-wage labor market and efforts to deter criminal activity.

Suggested Citation

  • Beauchamp Andrew & Chan Stacey, 2014. "The Minimum Wage and Crime," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(3), pages 1213-1235, July.
    • Handle: RePEc:bpj:bejeap:v:14:y:2014:i:3:p:23:n:20
    DOI: 10.1515/bejeap-2013-0130
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    References listed on IDEAS

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    Cited by:

    1. Riccardo Ciacci, 2023. "On the economic determinants of prostitution: marriage compensation and unilateral divorce in U.S. states," Review of Economics of the Household, Springer, vol. 21(3), pages 941-1017, September.
    2. 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.
    3. Bjørnskov, Christian, 2015. "Does economic freedom really kill? On the association between ‘Neoliberal’ policies and homicide rates," European Journal of Political Economy, Elsevier, vol. 37(C), pages 207-219.
    4. Amanda Y. Agan & Michael D. Makowsky, 2023. "The Minimum Wage, EITC, and Criminal Recidivism," Journal of Human Resources, University of Wisconsin Press, vol. 58(5), pages 1712-1751.
    5. Randi Hjalmarsson & Stephen Machin & Paolo Pinotti, 2024. "Crime and the Labor Market," RF Berlin - CReAM Discussion Paper Series 2426, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    6. Eric Melander & Martina Miotto, 2023. "Welfare Cuts and Crime: Evidence from the New Poor Law," The Economic Journal, Royal Economic Society, vol. 133(651), pages 1248-1264.
    7. David Neumark, 2024. "The effects of minimum wages on (almost) everything? A review of recent evidence on health and related behaviors," LABOUR, CEIS, vol. 38(1), pages 1-65, March.
    8. Randi Hjalmarsson & Stephen Machin & Paolo Pinotti, 2024. "Crime and the labor market," CEP Discussion Papers dp2044, Centre for Economic Performance, LSE.
    9. 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).
    10. Zachary S. Fone & Joseph J. Sabia & Resul Cesur, 2019. "Do Minimum Wage Increases Reduce Crime?," NBER Working Papers 25647, National Bureau of Economic Research, Inc.
    11. Randi Hjalmarsson & Stephen Machin & Paolo Pinotti, 2024. "Crime and the Labor Market," RF Berlin - CReAM Discussion Paper Series 2624, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).

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