Identifying the impact of labor market opportunities on criminal behavior

Abstract

In this paper, we study the relationship between labor market conditions and criminal behavior. We begin by qualitatively replicating key results in Raphael and Winter-Ebmer (2001), an influential paper that provided some of the first causal evidence connecting the state of the labor market (as measured by the unemployment rate) to criminal behavior (as measured by reported offense rates). Raphael and Winter-Ebmer find statistically significant positive effects of unemployment on property crime rates and a weaker and less consistent relationship between unemployment and violent crime rates. We build on this seminal work by exploring whether these estimated relationships continue to hold in more recent data. In carrying out our analysis, we find reason to consider alternative identification strategies (especially in the later period of the extended sample). We also investigate the impact of adding wages to the model, and we conduct a number of additional robustness checks. We conclude that the broad themes of Raphael and Winter-Ebmer's work remain valid, and yet additional research has the potential to reveal a more intricate and nuanced relationship between labor markets and crime.