The Effect of Job Loss and Unemployment Insurance on Crime in Brazil

We investigate the impact of job loss on crime and the mitigating role of unemployment benefits, exploiting detailed individual‐level data linking employment careers, criminal records, and welfare registries for the universe of male workers in Brazil. The probability of committing crimes increases o...

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Bibliographic Details
Published in:Econometrica 2022-07, Vol.90 (4), p.1393-1423
Main Authors: Britto, Diogo G. C., Pinotti, Paolo, Sampaio, Breno
Format: Article
Language:English
Subjects:
Cohabitation
Crime
Criminal records
Criminality
Discontinuity
Employment
Forests
Leisure
Occupational stress
registry data
Unemployment
Unemployment benefits
Unemployment insurance
Welfare
Workers
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Summary:We investigate the impact of job loss on crime and the mitigating role of unemployment benefits, exploiting detailed individual‐level data linking employment careers, criminal records, and welfare registries for the universe of male workers in Brazil. The probability of committing crimes increases on average by 23% for workers displaced by mass layoffs, and by slightly less for their cohabiting sons. Using causal forests, we show that the effect is entirely driven by young and low‐tenure workers, while there is no heterogeneity by education and income. Regression discontinuity estimates indicate that unemployment benefit eligibility completely offsets potential crime increases upon job loss, but this effect vanishes completely immediately after benefit expiration. Our findings point to liquidity constraints and psychological stress as the main drivers of criminal behavior upon job loss, while substitution between time on the job and leisure does not seem to play an important role.
ISSN:0012-9682
1468-0262
DOI:10.3982/ECTA18984