Neighborhood‐level economic activity and crime

ABSTRACT

Theories of criminology suggest that neighborhood‐level economic activity affects the conditions that make crime more likely. However, most studies on neighborhoods and crime focus solely on residential characteristics and ignore the commercial ones. In this article, we estimate the effect of neighborhood‐level economic activity on crime holding residential characteristics constant. To do so, we use crime and census data combined with a detailed data set on establishments in Washington, DC from 2000 to 2010 to create a comprehensive measure of neighborhood‐level economic activity. We exploit the panel nature of the data to identify the directionality of the results by removing unobserved heterogeneity and estimating lags and leads of economic activity. Results indicate that increases in economic activity are associated with reductions in property crime, but that the reduction in property crime occurs before the growth in economic activity and rises afterward. Violent crime declines the same year as growth in economic activity.

Notes

1. We define economic activity as any transactions or conduct for the purposes of selling, buying, or producing goods and/or services.

2. On a year‐over‐year basis, the number of establishments declined severely in 2009 due to the great recession, but then bounced back afterward. This increase was driven mostly by new small establishments with fewer than five employees.

3. Yearly statistics for residential characteristics at the block group level are not available. Therefore, we linearly interpolate the 2000 Census and the 2008–2012 ACS and 2010 Census for the years 2001–2009. We ran robustness checks for the model by including only 2000 and 2010 in the panel model without interpolated variables, and the results were similar. These results are available upon request from the authors.

4. Results are robust to estimation using a Poisson distribution.

5. We also performed robustness checks that included spatial lags of crimes on neighboring block groups. Significant spatially lagged coefficients were all of the same sign as the unlagged coefficients, indicating spillovers onto nearby block groups.

6. An Ashenfelter dip refers to the decline in mean earnings of participants in employment and training programs during the period just prior to participation. This dip causes bias if this period is used as a baseline because of mean reversion after the dip. This is similar to the decrease in crime immediately prior to an increase in economic activity. If used as a baseline, the effects of economic activity on crime may appear to be larger than they actually are because they are being compared to a lower level of crime before the activity increase.

7. For the sake of brevity, we do not show these results here. Results can be obtained upon request from the authors.

Additional information

Notes on contributors

Christina Plerhoples Stacy

Christina Plerhoples Stacy is a Research Associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute where she specializes in urban economics, applied econometrics, and personal and public finance. She earned her bachelor's degree in psychology from Boston College, her master's degree in public and international affairs from the University of Pittsburgh, and her PhD in agricultural, food, and resource economics from Michigan State University.

Helen Ho

Helen Ho is a Research Assistant at the National Bureau of Economic Research and MIT's School Effectiveness and Inequality Initiative. From 2012 to 2015 Ho worked in the Metropolitan Housing and Communities Policy Center at the Urban Institute where she specialized in criminal justice, economic development, and social inequality. Ho earned her bachelor's degree in public policy studies from Duke University.

Rolf Pendall

Rolf Pendall is Director of the Metropolitan Housing and Communities Policy Center at the Urban Institute. Pendall's research expertise includes metropolitan growth trends; land‐use planning and regulation; demographic change; federal, state, and local affordable housing policy and programs; and racial residential segregation and the concentration of poverty. From 1998 until mid‐2010 Pendall was a Professor in the Department of City and Regional Planning at Cornell University.