Spatial Crime Patterns and the Introduction of the UK Minimum Wage

Kirstine Hansen and Stephen Machin

Oxford Bulletin of Economics and Statistics, 2002, vol. 64, issue supplement, 677-697

Abstract: This paper provides an empirical evaluation of whether one can uncover a link between crime and the labour market using a research methodology that is different to that utilized in existing work. We exploit a large regulatory change that was made to the UK labour market when a national minimum wage was introduced in April 1999. This minimum wage introduction provided pay increases for quite a large number of low paid workers. From a theoretical perspective we argue that this wage boost could have altered individual incentives to participate in crime. We then go on to develop empirical tests of this hypothesis comparing spatial crime patterns, measured at police force area level, in the years before and after the introduction of the minimum wage floor. Our empirical study of area‐level crime rates before and after the minimum wage introduction uncovers a statistically significant link between changes in crime and the extent of area low pay before the minimum wage was introduced. Overall our results are in line with the notion that altering wage incentives can affect crime and therefore that there exists a link between crime and the low wage labour market.

Date: 2002
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