Researchers examined national crime rates between 1979 and 1997 and found much of the increase in crime during that period can be explained by falling wages and rising unemployment among men without college educations.
While politicians have focused on crime-fighting initiatives as central to controlling crime, this study shows that the impact of labor markets should not be overlooked, said Bruce Weinberg, co-author of the study and associate professor of economics at Ohio State University.
"Public officials can put more cops on the beat, pass tougher sentencing laws, and take other steps to reduce crime, but there are limits to how much these can do," he said. "We found that a bad labor market has a profound impact on the crime rates."
Weinberg conducted the study with Eric Gould of Hebrew University and David Mustard of the University of Georgia. Their results appear in the current issue of The Review of Economics and Statistics.
From 1979 to 1997, federal statistics show the inflation-adjusted wages of men without a college education fell by 20 percent. Despite declines after 1993, the property and violent crime rates (adjusted for changes in the country's demographics) increased by 21 percent and 35 percent respectively during that period.
Weinberg said the strongest finding in this new study is a link between falling wages and property crimes such as burglary. However, the study also found a link between wages and some violent crimes - such as assault and robbery - in which money is often a motive.
The weakest relationship occurred with murder and rape - two crimes in which monetary gain is not usually a motive.
"The fact that murder and rape didn't have much of a connection with wages and unemployment provides good evidence that many criminals are motivated by poor economic conditions to turn to crime," Weinberg said.
The theory behind why crime increases in the wake of falling wages is simple, he said. "A decline in wages increases the relative payoff of criminal activity. It seems obvious that economic conditions should have an impact on crime, but few studies have systematically studied the issue."
National crime rates rose from 1979 to 1992, when wages for less skilled men were falling. Crime declined from 1993 to 1997. This decline in crime corresponded to a leveling off and slight increase in the wages of unskilled workers across the nation in that period, Weinberg said.
Weinberg and his colleagues did several analyses to examine the connection between wages, unemployment and crime between 1979 and 1997 for men without college educations. In one analysis, they looked at crime rates in 705 counties across the country - all counties with populations greater than 25,000 - and compared them with state wages and unemployment rates. The second analysis focused on statistics from 198 metropolitan areas as defined by the U.S. Census. The researchers took into account factors such as arrest rates and number of police that may have also influenced crime rates.
In the first analysis, the researchers calculated that the 20 percent fall in the wages of non-college-educated men over the entire period can account for a 10.8 percent increase in property crime and a 21.6 percent increase in violent crime. "Wage declines are responsible for more than half of the long term increase in both property and violent crime," Weinberg said.
Overall, wages had a larger effect on crime than did the unemployment rate, according to Weinberg. That's because the unemployment rate is cyclical and there is no strong long-term trend. Wages, however, fell steadily during most of the period studied.
"Clearly, the long-term trend in wages was the dominant factor on crime during this period," he said.
In a third analysis, the researchers examined data from the 1979 National Longitudinal Survey of Youth to see if the criminal behavior of the young men who participated in the survey could be linked to economic conditions where they lived. This survey asked participants if they had taken part in crimes such as shoplifting and robbery in the previous year.
As expected, economic conditions had no effect on the criminal activity for the more highly educated workers in the sample.
However, among less educated men, lower wages and higher unemployment rates in the states where they lived made it more likely that they had participated in crimes. This was true even after the researchers took into account factors such as cognitive ability and family background.
"Low-skilled workers are clearly the most affected by the changes in labor opportunities, and these results remain after controlling for a wealth of personal and family characteristics," he said.