The effect of active labor market policies on crime: Incapacitation and program effects

Abstract

We estimate the effects of active labor market policies on men’s crime. To do this, we exploit a local policy change in Denmark that targeted unemployed people without unemployment insurance. Our results show that crime rates decreased among treated men relative to both untreated unemployment insured and uninsured men. Lower property crime accounted for the decrease in overall crime. Increased earnings from higher employment rates cannot explain the decrease in crime. Instead, participation in the active labor market program reduced young men’s propensity to commit crime. The results suggest that active labor market programs have substantial secondary effects on criminality.