The Effects of Labor Markets and Income Inequality on Crime: Evidence from Panel Data

Abstract

We estimate a model of crime using panel data for the U.S. We focus on the role of labor markets, income distribution, and demographics on property crime. We find strong evidence that favorable labor market conditions have a significant negative effect on property crime. We further test this result using sector‐specific wages and find that crime is most elastic with respect to wages in sectors that use low‐skilled labor. We also find that income inequality has no significant effect on crime and that the proportion of young males in the population has a significant positive effect on crime.

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