The Short-Run Effects of the Great Recession on Crime

• Published in: Journal of economics, race, and policy (Online) Vol. 1; no. 2-3; pp. 92 - 111
• Main Author: Ghosh, Pallab Kumar
• Format: Journal Article
• Language: English
• Published: Cham Springer International Publishing 01.09.2018; Springer Nature B.V
• Subjects: Black people; Crime; Criminal statistics; Economic conditions; Economic Policy; Economics; Economics and Finance; Employment; Estimates; Ethnic groups; Great Recession; International Economics; International Political Economy; Labor market; Men; Minimum wage; Minority groups; Original Article; Property crime; Race; Recessions; Regional variations; School dropouts; Trends; Unemployment; Variables; Violent crime; Workers; Young men; Unskilled young men; Unemployment rate; Great recession; Minimum wage workers
• ISSN: 2520-8411; 2520-842X
• DOI: 10.1007/s41996-018-0014-8

The Great Recession had the most severe impacts on the unemployment rates of the racial and ethnic minorities as well as less-educated young men. There were cross-sectional variations of these disproportionate adverse impacts. This study exploits the changes in regional variations of the unemployment rates of unskilled men before and after the Great Recession to explain the sharp fall in aggregate crime rates in the post-recession recovery period. Our 2SLS approach uses plausible exogenous sources of changes in the state employment growth of minimum wage workers induced by the national employment growth of minimum wage workers. We find that changes in regional variations of the unemployment rates of unskilled young men can explain approximately 25% of the fall in the aggregate crime rate in the post-recession expansionary period. Estimating the heterogeneous impacts of unskilled young men by race, we find that the fall in aggregate crime rate was mainly driven by the changes in the unemployment rates of young black men.