Restricting Unemployment Insurance Increases Crime: Evidence from the American Rescue Plan

• In Event: Policy Interventions for Domestic Violence Prevention and Support: Evaluating Impacts and Implementation

Abstract

In 2020 and 2021, the U.S. federal government dramatically increased weekly unemployment insurance payments and ultimately extended these programs to September 2021 by the American Rescue Plan Act. In June and July of 2021, many states opted out of all or part of these unemployment insurance expansions, creating a natural experiment. We leverage this withdrawal to analyze the effect of reducing unemployment insurance payments on different kinds of crime. We use a difference-in-differences framework, comparing states which reduced unemployment insurance payments to states which did not withdraw from any aspect of the federal government’s unemployment insurance expansions. Using detailed daily nationwide data on crime reports, we estimate that restricting unemployment insurance increased the overall reported crime rate by 12% relative to the pre-treatment mean. The overall effect is primarily driven by an 11% increase in property crime, but all types of crime increased, including a 7% increase in intimate partner violence.

Author

• Rebecca Hsu, Howard University
  Presenting Author