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Crime does pay (at least when it’s violent)!– On the compensating wage differentials of high regional crime levels

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  • Nils Braakmann

    (Institute of Economics, Leuphana University of Lüneburg)

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 and official police statistics for 2003 to 2006, we consider both violent and non-violent crimes and use three-way error-components estimators to control for individual and regional heterogeneity. Our findings suggest a positive and rather large compensating differential for the risk of falling victim to a violent crime while no such effect exists for other criminal activities. However, our results also suggest that the wage effects for most individuals are rather small due to small variation in the crime rates.

Suggested Citation

  • Nils Braakmann, 2008. "Crime does pay (at least when it’s violent)!– On the compensating wage differentials of high regional crime levels," Working Paper Series in Economics 91, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:91
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Compensating wage differentials; crime; three-way error-components model;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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