The Impact of Living‐Wage Ordinances on Urban Crime

Abstract

We examine the impact of living wages on crime. Past research has found that living wages appear to increase unemployment while providing greater returns to market work. The impact on crime, therefore, is unclear. Using data on annual crime rates for large cities in the United States, we find that living‐wage ordinances are associated with notable reductions in property‐related crime and no discernable impact on nonproperty crimes.

Do Minimum Wage Increases Reduce Crime?

“…Although not emphasized in their paper, Fernandez et al (2014) also find that minimum wage increases are associated with reductions in property and violent crimes, though these associations are sensitive to the inclusion of observable controls and city-specific time trends. In contrast, Beauchamp and Chan (2014) use individual-level panel data over a comparable period, and focusing on low-wage workers for whom minimum wages were more likely to bind, find that minimum wage increases increase property and violent crimes among teenagers, but often find the opposite effect for young adults.…”

“…15 Hansen and Machin (2002) examine the introduction of a new national minimum wage law in the United Kingdom and find that crime declines more in localities with larger shares of low-wage workers. Fernandez et al (2014) use a clever identification strategy to estimate the the law increased wages for low-wage workers, but also led to adverse employment effects, with an employment elasticity of roughly -0.1. 14 Warren and Hamrock (2010) find some modest evidence that larger minimum wage increases may have small negative effects on high school completion rates in states where students are permitted to drop out before age 17.…”

“…where is the criminal arrest rate per 1,000 population for those ages 16-to-24 in county c in state s in year t. Our main independent variable of interest ln(MWcst), is the natural log of the maximum of the city, county, state, or Federal minimum wage for a given county in year t, measured in the 2016 dollars. 25 We also include a wide set of controls: includes the number of agencies reporting arrests to a county, the share of the county population that is African American, Hispanic, and 26 In some specifications, we also include an indicator for the presence of living wage laws, following Fernandez et al (2014).…”

“…We attempt to explain differences in our results from this prior work. First, while focusing largely on living wages, estimates shown in Table 3A of Fernandez et al (2014;p. 488) show that minimum wages enacted between 1990 and 2010 reduced overall property and violent crime in large cities.…”

“…Estimates are positive and statistically indistinguishable from zero. 40 Following Fernandez et al (2014), we gather data for this replication using https://www.ucrdatatool.gov/, where the FBI uses an imputation procedure to estimate crime rates for agencies with poor reporting. These data are only available through 2014.…”