Abstract
This study investigated whether immigration increases crime rates by applying dynamic panel threshold models to fine geographic units. This is distinct from previous studies, in which static and continuous models were applied to coarse geographic units. This analysis revealed that immigration effect on crime has structural breaks (or discontinuities). The favorable ethnic network externalities on crime emerge after the immigrant share reaches a certain level in the community. This analysis also showed that the immigration effect observed in fine geographic units disappeared when coarsely classified units were used. If geographic aggregation obscures heterogeneity among cities, the immigration effect is underestimated. These results suggest the advantage of dynamic threshold models with fine geographic units compared to traditional static and continuous models with coarse geographic units when discussing the immigration-crime relationship.
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