Crime Heterogeneity and Welfare Spending Theory and Empirical Evidence based on the Universal Credit System

King Yoong Lim and Reagan Pickering

NBS Discussion Papers in Economics from Economics, Nottingham Business School, Nottingham Trent University

Abstract: We examine the effects of welfare spending on crime, using the universal credit (UC) system in England and Wales as a case study. Motivated by a seemingly positive crime-UC nexus, we develop a novel theoretical model of crime and cash transfer that distinguishes between introductory and level effect, as well as a crime-specific human capital-induced heterogeneity between criminal activities. Based on county-level data for 10 crime types, we use both standard fixed-effect estimator and different instrumental variable-estimation strategies (to account for endogeneity of the UC rate) to evaluate the theoretical propositions. Criminal damage and arson are found to exhibit the characteristics of being criminal human capital-dependent. In contrast, as a poliy tool to combat crime, welfare spending appears to be most effective in reducing public disorder and weapon possessions. Overall, we find the claim that UC policy has led to an increase in crime rate to be overstated.

Keywords: Crime Heterogeneity; England and Wales; Universal Credit; Welfare Spending (search for similar items in EconPapers)
JEL-codes: C26 H53 H75 K42 (search for similar items in EconPapers)
Date: 2020-08
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http://www.ntu.ac.uk/__data/assets/pdf_file/0030/1282575/NBS2020_04.pdf First version, 2020 (application/pdf)

Related works:
Journal Article: Does crime type matter in understanding the nexus between universal credit and crime? Evidence from England and Wales (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:nbs:wpaper:2020/04

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