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Title:Crime does pay (at least when it's violent)!: on the compensating wage differentials of high regional crime levels PDF Logo
Authors:Braakmann, Nils
Issue Date:2008
Series/Report no.:University of Lüneburg Working Paper Series in Economics 91
Abstract:This paper investigates whether high regional crime levels lead to a compensating wage differential paid by firms in the respective region. Using data from German social security records and official police statistics for 2003 to 2006, we consider both violent and non-violent crimes and use three-way error-components estimators to control for individual and regional heterogeneity. Our findings suggest a positive and rather large compensating differential for the risk of falling victim to a violent crime while no such effect exists for other criminal activities. However, our results also suggest that the wage effects for most individuals are rather small due to small variation in the crime rates.
Subjects:Compensating wage differentials
crime
three-way error-components model
JEL:J31
Document Type:Working Paper
Appears in Collections:Working Paper Series in Economics, Leuphana Universität Lüneburg

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