Poverty and crime in 19th century Germany - Edward Miguel,.pdfVIP

Journal of Urban Economics 59 (2006) 370–388 /locate/jue Poverty and crime in 19th century Germany Halvor Mehlum a , Edward Miguel b,c,∗ , Ragnar Torvik d a Department of Economics, University of Oslo, and International Peace Research Institute of Oslo, Box 1095 Blindern, N-0317 Oslo, Norway b Department of Economics, University of California, 549 Evans Hall #3880, Berkeley, CA 94720-3880, USA c National Bureau of Economic Research d Department of Economics, Norwegian University of Science and Technology, N-7491 Trondheim, Norway Received 17 February 2005; revised 1 September 2005 Available online 28 February 2006 Abstract We estimate the impact of poverty on crime in 19th century Bavaria, Germany. Rainfall is used as an instrumental variable for grain (rye) prices to address econometric identification problems in the existing literature. The rye price was a major determinant of living standards during this period. The rye price has a positive effect on property crime: a one standard deviation increased property crime by 8%. OLS estimates are twice as large as instrumental variable estimates, highlighting the value of our empirical approach. Higher rye prices lead to significantly less violent crime, though, and we argue that higher beer prices, caused by the higher rye prices, are a likely explanation.  2006 Elsevier Inc. All rights reserved. JEL classification: I33; N93 Keywords: Poverty; Crime; Violence; Rainfall; Germany 1. Introduction This paper uses a new empirical approach to estimate the causal impact of poverty on crime. We study both property crime and violent crime in 19th century Bavaria, Ger