Crime And The EITC

Brigham Brau (North Carolina), Jeffrey L. Hoopes (North Carolina; Google Scholar), Junyoung Jeong (North Carolina; Google Scholar) & Mark H. Lang (North Carolina; Google Scholar), Crime and the EITC:

We examine the effects of an annual government social safety net payment on crime by leveraging geographic and intertemporal variation in the magnitude and timing of earned income tax credit (EITC) payments, combined with crime micro-data. We find that drug-related crimes increase somewhat whereas burglary and robbery decrease substantially within three weeks following peak EITC payments. Non-economic crimes, such as arson and sexual offenses, remain unchanged. Leveraging additional temporal variation in EITC disbursements induced by the PATH Act in 2017 confirms our findings. ...

Conclusion
Our findings provide an understanding of the short-term implications of cash payments through the EITC on crime. First, we find a reduction in economically motivated crimes such as burglary and robbery immediately after EITC payments, suggesting that the cash inflow alleviates financial pressures that might otherwise drive individuals to commit such crimes. This reduction aligns with the idea that improving short-term financial security can decrease the incentive for financially driven criminal activities. Second, the same influx of cash increases narcotics-related crimes, indicating that additional disposable income may be used in part to finance drug-related activities. These effects are pronounced in ZIP Codes with the highest rates of EITC receipt.

Additionally, this paper contributes to our policy understanding of the implications of government assistance programs, particularly the debate over the optimal scheduling of such payments. Whereas annual payments like the EITC can provide financial relief and positively influence the community by reducing certain types of crime, they also have the potential to exacerbate other issues, such as drug-related crimes. These insights suggest that policymakers may wish to consider the potential trade-offs inherent in payment scheduling and explore strategies that could help mitigate negative outcomes, such as spreading payments throughout the year or coupling cash payments with targeted social services aimed at substance abuse prevention and treatment.

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