Economics at your fingertips  

Crime and the minimum wage

Christine Braun

Review of Economic Dynamics, 2019, vol. 32, 122-152

Abstract: How does the minimum wage affect crime rates? Empirical research suggests that increasing a worker's wage can deter him from committing crimes. On the other hand, if that worker becomes displaced as a result of the minimum wage, he may be more likely to commit a crime. In this paper, I describe a frictional world in which a worker's criminal actions are linked to his labor market outcomes. The model is calibrated to match labor market outcomes and crime decisions of workers from the National Longitudinal Survey of Youth 1997, and shows that the relationship between the aggregate crime rate and the minimum wage is U-shaped. The results from the calibrated model, as well as empirical evidence from county level crime data and state level minimum wage changes from 1995 to 2014, suggest that the crime minimizing minimum to median wage ratio for 16 to 19 year olds is 0.91. However, the welfare maximizing minimum to median wage ratio is 0.87, not equal to the crime minimizing value. The median wage of 16 to 19 year olds in the United States in 2018 was $10, suggesting that any federal minimum wage increase up to $8.70 may be welfare improving. (Copyright: Elsevier)

Keywords: Crime; Minimum wage; Unemployment (search for similar items in EconPapers)
JEL-codes: J08 J38 J64 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See for details.

Related works:
Software Item: Code and data files for "Crime and the minimum wage" (2019) Downloads
Working Paper: Crime and the Minimum Wage (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/

Access Statistics for this article

Review of Economic Dynamics is currently edited by Jonathan Heathcote and Vincenzo Quadrini

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

Page updated 2019-11-15
Handle: RePEc:red:issued:18-265