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The unintended effects of minimum wage increases on crime

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  • Fone, Zachary S.
  • Sabia, Joseph J.
  • Cesur, Resul

Abstract

The availability of higher-paying jobs for low-skilled individuals has been documented to reduce crime. This study explores the impact of one of the most prominent labor policies designed to provide higher wages for low-skilled workers — the minimum wage — on teenage and young adult arrests. Using data from the 1998–2016 Uniform Crime Reports and a difference-in-differences approach, we find that a 1 percent increase in the minimum wage is associated with a 0.2 to 0.3 percent increase in property crime arrests among 16-to-24-year-olds, an effect driven by an increase in larceny-related arrests. The magnitudes of our estimated elasticities suggest that a $15 Federal minimum wage, proposed as part of the Raise the Wage Act, could generate approximately 309,000 additional larcenies. Job loss emerges as an important mechanism to explain our findings, and supplemental analyses of affected workers in the National Longitudinal Survey of Youth 1997 show that this effect is concentrated among workers bound by minimum wage increases. Finally, we find no evidence that minimum wage hikes impact violent crime arrests.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:pubeco:v:219:y:2023:i:c:s0047272722001827
    DOI: 10.1016/j.jpubeco.2022.104780
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