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.