Local crime and fertility

Abstract

We present the first estimates of the impact of local area crime on fertility. We first develop a simple theoretical model to examine the relationship between crime and fertility. We explore labor income, as a proxy for labor market conditions, house prices and school quality as potential channels. The model predicts that individuals change their demand for children through the income and substitution effects in response to changes in crime rates. We test the theoretical predictions of the model using longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) survey that matches each household to crime statistics, school quality and house prices at the Local Government Area (LGA) level. We find that a one standard deviation increase in the LGA crime rate causes a 7.8 per cent increase in fertility and that house prices and school quality are channels through which crime influences fertility. We find that the mediating effect of school quality is stronger than that of house prices, and that the interaction between school quality and house prices reinforces the role of house prices as a mediator. Further, the positive effect of crime on fertility rates is stronger for homeowners compared to non-homeowners and weaker for those homeowners with a mortgage, relative to those who own their home outright.