“The Unintended Effects of Minimum Wage Increases on Crime”, Zachary S. Fone, Joseph J. Sabia, Resul Cesur2023-03 (crime, economics)⁠:

• Improved local labor market opportunities for low-skilled individuals may reduce criminal behavior by increasing its opportunity cost.

• This study explores the impact of one of the most prominent low-wage labor policies in the United States—the minimum wage—on teenage and young adult arrests.

• Using data from the 1998^–₁₈2016 Uniform Crime Reports and a difference-in-differences approach, we find that a 1% increase in the minimum wage is associated with a 0.2% increase in property crime arrests among 16-to-24-year-olds, an effect driven by larceny-related arrests.

• Supplemental analyses of “affected workers” in the National Longitudinal Survey of Youth1997 show that increases in the minimum wage increase property crime for low-wage workers.

• Minimum wage-induced job loss may be a mechanism to explain increases in larceny arrests.

• A $15 Federal minimum wage, proposed as part of the Raise the Wage Act of 2021, could generate median criminal externality costs of ~$766 million.

The availability of higher-paying jobs for low-skilled individuals has been documented to reduce crime. This study explores the impact of one of the most prominent labor policies designed to provide higher wages for low-skilled workers—the minimum wage—on teenage and young adult arrests.

Using data from the 1998^–₁₈2016 Uniform Crime Reports and a difference-in-differences approach, we find that:

a 1% increase in the minimum wage is associated with a 0.2–0.3% increase in property crime arrests among 16-to-24-year-olds, an effect driven by an increase in larceny-related arrests. The magnitudes of our estimated elasticities suggest that a $15 Federal minimum wage, proposed as part of the Raise the Wage Act, could generate ~309,000 additional larcenies. Job loss emerges as an important mechanism to explain our findings, and supplemental analyses of affected workers in the National Longitudinal Survey of Youth1997 show that this effect is concentrated among workers bound by minimum wage increases.

Finally, we find no evidence that minimum wage hikes impact violent crime arrests.

[Keywords: minimum wage, crime, employment, wages]