Econometrica

Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Jul, 2022, Volume 90, Issue 4

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

https://doi.org/10.3982/ECTA18984
p. 1393-1423

Diogo G. C. Britto, Paolo Pinotti, Breno Sampaio

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.


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

Diogo G. C. Britto, Paolo Pinotti, and Breno Sampaio

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

Diogo G. C. Britto, Paolo Pinotti, and Breno Sampaio

This online appendix contains material not found within the manuscript.