Youth Crime and the Minimum Wage
March 18, 2004
This study examines the relationship between the minimum wage and youth criminal activity. I show that a priori economic reasoning cannot predict the sign of the relationship - while a minimum wage hike reduces the attractiveness of crime as a source of income relative to legitimate work, it may also disemploy young workers and so induce their participation in crime. I then present three empirical analyses to fill this gap: a panel approach using state-level data covering the period from 1982 to 2001, a cross-sectional examination of the varying impact of the 1990-1991 and 1996-1997 federal minimum wage hikes across states, and an investigation of self-reports of crime by respondents to the National Longitudinal Survey of Youth 1997. In each analysis I find evidence that the effect of the minimum wage on youth crime is negative for crimes that have a strong pecuniary component. This implies that any criminogenic disemployment impact of the minimum wage is outweighed by the incentives against crime that higher legitimate wages create for young workers.
Number of Pages in PDF File: 83
Keywords: Minimum wage, crime
JEL Classification: J22, J38
Date posted: May 13, 2004