Is there a compensating wage differential for high crime levels? First evidence from Europe

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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, official police statistics and official statistics for 2003-2006, I consider both violent and non-violent crimes and use three-way error-components estimators to control for individual and regional heterogeneity. The findings suggest that wages are practically unrelated to changes in crime rates. This result is robust over a wide range of subgroups. There is, however, some evidence that crime rates influence land prices. © 2009 Elsevier Inc. All rights reserved.
Original languageEnglish
JournalJournal of Urban Economics
Volume66
Issue number3
Pages (from-to)218-231
Number of pages14
ISSN0094-1190
DOIs
Publication statusPublished - 01.11.2009

    Research areas

  • Economics - Compensating wage differential, Crime, Three-way error-components model

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