CRIME AND LOCAL LABOR MARKET OPPORTUNITIES FOR LOW‐SKILLED WORKERS: EVIDENCE USING JAPANESE PREFECTURAL PANEL DATA

This paper examines the link between crime and labor market opportunities in Japan. To consider this link, we estimate the crime supply function first introduced by Becker using panel data for Japanese prefectures. The main empirical results are as follows. First, we expect that increasing the number of police will reduce crime, regardless of its type (i.e. whether referring to total crime, violent crime or larceny). Second, crime rates are generally lower in prefectures where a low‐skilled individual can find a job more easily. Third, the effects of wages for low‐skilled workers on crime, especially larceny, are significantly negative, whereas average wages in a prefecture do not appear to affect crime. Fourth, the prefectures with lower educational standards are expected to suffer more crime than other prefectures. Finally, prefectures with higher Gini coefficients on schooling years are also expected to suffer more crime than other prefectures.