Do Minimum Wage Increases Reduce Crime?

80 Pages Posted: 19 Mar 2019

See all articles by Zach Fone

Zach Fone

University of New Hampshire - Department of Economics

Joseph Sabia

University of New Hampshire; San Diego State University - Department of Economics

Resul Cesur

University of Connecticut, School of Business - Dept. of Healthcare Economics

Date Written: March 2019

Abstract

An April 2016 Council of Economic Advisers (CEA) report advocated raising the minimum wage to deter crime. This recommendation rests on the assumption that minimum wage hikes increase the returns to legitimate labor market work while generating minimal adverse employment effects. This study comprehensively assesses the impact of minimum wages on crime using data from the 1998-2016 Uniform Crime Reports (UCR), National Incident-Based Reporting System (NIBRS), and National Longitudinal Study of Youth (NLSY). Our results provide no evidence that minimum wage increases reduce crime. Instead, we find that raising the minimum wage increases property crime arrests among those ages 16-to-24, with an estimated elasticity of 0.2. This result is strongest in counties with over 100,000 residents and persists when we use longitudinal data to isolate workers for whom minimum wages bind. Our estimates suggest that a $15 Federal minimum wage could generate criminal externality costs of nearly $2.4 billion.

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Suggested Citation

Fone, Zachary and Sabia, Joseph and Cesur, Resul, Do Minimum Wage Increases Reduce Crime? (March 2019). NBER Working Paper No. w25647. Available at SSRN: https://ssrn.com/abstract=3354286

Zachary Fone (Contact Author)

University of New Hampshire - Department of Economics ( email )

10 Garrison Ave
Durham, NH 03824
United States

Joseph Sabia

University of New Hampshire

15 College Road
Durham, NH 03824
United States

San Diego State University - Department of Economics ( email )

5500 Campanile Drive
San Diego, CA 92182
United States

Resul Cesur

University of Connecticut, School of Business - Dept. of Healthcare Economics ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States

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