NCPA - National Center for Policy Analysis

Crime And Labor Markets

August 25, 1999

Economists have repeatedly found that higher arrest and conviction rates, and longer prison terms, reduce crime. The effects of labor markets, if any, on crime have been less clear. Two recent studies, however, find that healthy job markets reduce participation in crime.

  • Using data for the 48 contiguous states plus the District of Columbia over the years 1984-93, three James Madison University economists find that a 10 percent increase in unskilled wages decreases crime about 6 percent.
  • Differences in the degree of income inequality among the states, however, had no impact on crime.
  • These results support a 1998 study by University of California - Los Angeles economist Jeffrey Grogger using individual data on young men from the National Longitudinal Survey of Youth. He found a 10 percent increase in wages seems to reduce youth participation in crime by 6 percent to 9 percent.

Source: Joanne M. Doyle, Ehsan Ahmed, and Robert N. Horn, "The Effects of Labor Markets and Income Inequality on Crime: Evidence from Panel Data," Southern Economic Journal, April 1999, pp. 717-38.

 

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