83 Pages Posted: 13 May 2004
Date Written: 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.
Keywords: Minimum wage, crime
JEL Classification: J22, J38
Suggested Citation: Suggested Citation