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I was recently reading about the pros and cons of increasing the minimum wage.

This excerpt is from pro #15 at the bottom of this webpage:

Researchers who studied crime rates and the minimum wage in New York City over a 25-year period found that "[i]ncreases in the real minimum wage are found to significantly reduce robberies and murders… a 10 percent increase in the real minimum wage results in a 6.3 to 6.9 percent decrease in murders" and a 3.4 to 3.7 percent decrease in robberies.

I cannot find a bibliography for this webpage, so I do not know which study is being referred to specifically.

Are there actually any studies that established a causal relationship between an increase in the minimum wage in NYC and a decrease in robberies and murders? If so, do these studies take into account potential lurking variables like other policies enacted at the same time or overall trends present before the increase in real minimum wage?

  • I cannot find a bibliography for this webpage?? That quote is linked [181] to "Andrew Beauchamp and Stacey Chan, "The Minimum Wage and Crime," bc.edu, Nov. 18, 2013", which is perfectly 'googable'. Please update your question. – user22865 Nov 17 '16 at 9:19
  • Another paper present here tells that "CEA finds that raising the minimum wage to $12 by 2020 would result in a 3 to 5 percent crime decrease (250,000 to 510,000 crimes) and a societal benefit of $8 to $17 billion dollars." – pericles316 Nov 17 '16 at 15:11
  • @Jan Doggen-Are you sure of that because when one goes through "The Minimum Wage and Crime," the data it analyses is noted to be obtained from "National Longitudinal Survey of Youth 1997 cohort". – pericles316 Nov 17 '16 at 15:14
  • @pericles316 My point is the OP could have gone and investigate further, like you did. – user22865 Nov 17 '16 at 15:42
  • Since the site linked to has a specific agenda on this topic, it would not surprise me if the causal attribution is more on their part than the researchers. Though it makes sense to me that it would be true, actually showing causality is something else, though. – PoloHoleSet Nov 17 '16 at 15:45
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The original source of the quote is

Corman, H. and Mocan, N., 2005. Carrots, sticks, and broken windows. Journal of Law and Economics, 48(1), pp.235-266. URL - requires subscription

or potentially an earlier version of this paper,

Corman, H. and Mocan, N., 2002. Carrots, sticks and broken windows (No. w9061). National Bureau of Economic Research. URL - no subscription required

They model the crime rate in NYC over the period 1974-1999 as a function of economic indicators, demographics, and deterrence measures, including:

  • unemployment rate *
  • real minimum wage *
  • felony arrests *
  • number of NYC residents incarcerated in state correctional facilities *
  • size of the NYC police force *
  • number of misdemeanor arrests ("broken window" policing) *
  • number of 14–17-year-olds in NYC
  • seasonality

and try to quantify the impact of each of the variables marked with a * on felony crime rate. (Other potential contributing factors are not considered.) They find that their model explains "about one-third to all of the observed decline in index crime in NYC between 1990 and 1999" (depending on the specific crime), and that the deterrence measures have a greater effect than the economic indicators.

The quote in your question comes from two sections of the paper (emphasis mine):

Increases in the real minimum wage are found to significantly reduce robberies, murders, and grand larcenies, and higher unemployment is significantly related to increased burglaries and motor vehicle thefts. Thus, although it is not always the same economic indicator, there is evidence that economic conditions affect all felony crimes except assault and rape.

and later,

effect of various factors on crime

Table 3 includes elasticities only for statistically significant variables. The first row in each column reports the elasticity calculated using a zero-growth steady-state scenario for the variables in the system. The elasticities reported in the second row are calculated using the average of the year-to-year growth rates of the explanatory variables. Table 3 demonstrates, for example, that a 10 percent increase in the murder arrest rate generates about a 4 percent reduction in murders, and a 10 percent increase in the real minimum wage results in a 6.3–6.9 percent decrease in murders.

During the period of time included in the study, minimum wage varied as follows:

After an erosion in the value of the minimum wage in 1980s, there were two nominal wage increases in 1990 and 1991, and two other increases were implemented in 1996 and 1997. Overall, the real minimum wage remained rather stable during the 1990s.

real minimum wage over time

and the number of felony crimes varied as follows:

felony crimes over time

The following table shows the percent change in the number of crimes between 1990 and 1999 attributable to each of the explanatory variables listed above, according to the model:

enter image description here

(Between 1990 and 1999, real minimum wage increased 12%.)

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