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Recent decarceration trends have ignited increased focus on the possible gains of noncustodial alternatives to incarceration. People serving their sentence through other means than a prison or jail cell have higher desistance and better labor market outcomes after their sentence ends. In this study, we show that alternatives to incarceration also have important positive externalities on peers’ criminality. To identify causal effects, we use two Danish policy reforms that allowed offenders to server their short prison sentences at home under electronic monitoring (EM) instead of in prison. We demonstrate that having an EM-serving offender at home caused substantial decrease in the subsequent likelihood of committing crime for other men residing at the same address as the offender. Intention-to-treat effects estimates and average treatment of treated effects estimates show substantial decline. Especially younger brothers and sons of offenders experienced a strong decline in subsequent propensity to commit crime. Pseudo-tests shifting the reform periods, as well as placebo regressions, demonstrate that the reforms likely provided exogenous shocks. Characteristics measured prior to the residing offenders criminal activity accounts for part of the effect.