Job Market Paper
Does Unemployment Insurance Reduce Crime? [Draft coming soon]
Presentations: Midwestern Economics Association Annual Conference (2024), Western Economics Association Annual Conference (2024), W. E. Upjohn Institute for Employment Research (2024), Wheaton College (2024), APPAM Fall Research Conference (2024), Southern Economics Association Annual Meeting (2024)
Abstract
Does unemployment insurance (UI) reduce criminal behavior among low-wage displaced workers? To answer this question, I examine the effect of UI eligibility on subsequent criminal justice system involvement using linked UI and jail bookings administrative data. I estimate this effect using a regression discontinuity design that exploits the minimum earnings requirements for UI. I provide evidence indicating that being barely eligible for UI decreases arrest probability in the short run, with the overall reduction being driven by a reduction in arrests for assaults and drug crimes. The effects are large, although somewhat imprecisely estimated---within one year, access to UI leads to a 49 percent decrease in arrest probability, a 77 percent decrease in assault arrest probability, and a 71 percent decrease in drug crime arrest probability. Moreover, I consistently find a negative relationship between UI eligibility and arrests across many different specifications, and I can generally rule out large positive effects, which might be a concern if UI benefits prolong spells of nonemployment. A back-of-the-envelope calculation suggests that this crime reduction generates large public benefits approximately equal to the fiscal cost of loosening monetary eligibility requirements.