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Title: Crime and the Minimum Wage
Resulting in 1 citation.
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Braun, Christine |
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Crime and the Minimum Wage Review of Economic Dynamics 32 (April 2019): 122-152. Also: https://www.sciencedirect.com/science/article/pii/S1094202518302941 Cohort(s): NLSY97 Publisher: Society for Economic Dynamics Keyword(s): Crime; Geocoded Data; Labor Market Outcomes; Minimum Wage; State-Level Data/Policy Permission to reprint the abstract has not been received from the publisher. 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. |
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Bibliography Citation
Braun, Christine. "Crime and the Minimum Wage." Review of Economic Dynamics 32 (April 2019): 122-152.
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