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

Nils Braakmann

Journal of Urban Economics, 2009, vol. 66, issue 3, 218-231

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.

Keywords: Compensating; wage; differential; Crime; Three-way; error-components; model (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:66:y:2009:i:3:p:218-231

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