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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. 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.
    2. 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.
    3. Braakmann, Nils, 2012. "How do individuals deal with victimization and victimization risk? Longitudinal evidence from Mexico," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 335-344.
    4. Hua, Nan & Yang, Yang, 2017. "Systematic effects of crime on hotel operating performance," Tourism Management, Elsevier, vol. 60(C), pages 257-269.
    5. Braakmann, Nils, 2013. "Crime, health and wellbeing – Longitudinal evidence from Mexico," MPRA Paper 44885, University Library of Munich, Germany.
    6. 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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