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Is there a compensating wage differential for high crime levels? First evidence from Europe

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  • Braakmann, Nils

Abstract

This paper investigates whether high regional crime levels lead to a compensating wage differential paid by firms in the respective region. Using data from German social-security records, official police statistics and official statistics for 2003-2006, I consider both violent and non-violent crimes and use three-way error-components estimators to control for individual and regional heterogeneity. The findings suggest that wages are practically unrelated to changes in crime rates. This result is robust over a wide range of subgroups. There is, however, some evidence that crime rates influence land prices.

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  • Braakmann, Nils, 2009. "Is there a compensating wage differential for high crime levels? First evidence from Europe," Journal of Urban Economics, Elsevier, vol. 66(3), pages 218-231, November.
    • Handle: RePEc:eee:juecon:v:66:y:2009:i:3:p:218-231
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    1. Braakmann, Nils, 2013. "Crime, health and wellbeing – Longitudinal evidence from Mexico," MPRA Paper 44885, University Library of Munich, Germany.
    2. Giltman, M. & Pit, V. & Batyreva, M. & Sumik, E., 2020. "Which cities do we like to live in? Empirical analysis of employees' attitude to cities," Journal of the New Economic Association, New Economic Association, vol. 45(1), pages 111-130.
    3. Braakmann, Nils, 2012. "The link between non-property crime and house prices – Evidence from UK street-level data," MPRA Paper 44884, University Library of Munich, Germany.
    4. Nils Braakmann, 2017. "The link between crime risk and property prices in England and Wales: Evidence from street-level data," Urban Studies, Urban Studies Journal Limited, vol. 54(8), pages 1990-2007, June.
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    6. Hua, Nan & Yang, Yang, 2017. "Systematic effects of crime on hotel operating performance," Tourism Management, Elsevier, vol. 60(C), pages 257-269.

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