VICTIMS OF CRIME FACE REDUCED EARNINGS AND LONGER PERIODS ON BENEFITS: Evidence from the Netherlands
12 Apr 2021
New research reveals serious economic damage to the victims of crime. The study by Anna Bindler and Nadine Ketel finds that victimisation leads to significant losses in earnings and increases in days of social benefit receipt.
For example, after experiencing a violent crime such as assault, earnings decrease by up to 7.5% and 10.4% for men and women; and days of social benefit receipt increase by up to 5% and 6%, respectively. What’s more, the impact on female victims of domestic violence is larger: up to 17.9% decreases in earnings and 41.7% increases in social benefit days. For property crime such as robbery and burglary, earnings decrease and social benefit days increase too.
What happens to victims of crime? While more has been learned more about the cost of crime and the behaviour of offenders, we know fairly little about the impacts for victims.
This study finds that there are important economic consequences for victims of crime. This is consistent with prior research that has shown exposure to criminal environments to be associated with worse mental health/subjective wellbeing and adverse economic effects of traumatic life events.
The study explores administrative data including all police registered victimisations in the Netherlands between 2005 and 2016. These data can be linked to long panels of labour market and health outcomes and to supplementary socio-demographic variables. These unique data allow the authors to trace out the effects of becoming a victim of crime (specifically: assault, threat of violence, robbery, burglary) for a sample of more than 600,000 individuals:
- For all offences, there are sharp changes in monthly earnings and social benefit receipt at the time of victimisation. For most offences, earnings and benefits do not return to pre-victimisation levels within four years after victimisation.
- After a violent crime victimisation (assault, threat), earnings decrease by up to 7.5% and 10.4% for men and women. Days of social benefit receipt increase by up to 5% and 6%, respectively. More suggestive evidence shows that the impact on female victims of domestic violence is larger: up to 17.9% decreases in earnings and 41.7% increases in social benefit days.
- For property crime (robbery, violent/non-violent burglary), earnings decrease and social benefit days increase, too. Effect sizes are comparable to violent crime for robbery, but smaller for burglary.
- These labour market responses, in particular for violent offences, are in many cases accompanied by shorter-term increases in health expenditure, a proxy for deteriorations in (physical and mental) health.
The empirical design
The difficulty in estimating the effects of victimisation is that there are unobserved factors that could affect both labour market success and the chance of becoming a victim of crime, such as risky behaviours. In addition, there could be a ‘simultaneity problem’: victimisation could affect labour market outcomes, but at the same time labour market outcomes could impact the chance of victimisation.
To isolate the effect of victimisation, the study leverages the Dutch data to implement event-study designs. Intuitively, these compare labour market outcomes before and after victimisation while controlling for individual traits that do not change over time. By exploiting the monthly frequency in the data, they can trace out changes in labour market outcomes before and after victimisation (relative to one month before) and assess the plausible sequence of events.
Main findings and policy implications
Victimisation leads to significant losses in earnings and increases in days of social benefit receipt. Both persist over time (up to four years and longer); additional analyses suggest that repeat victimisations and criminal involvement plus other life events (moves and family outcomes) may contribute to these persistent effects.
The results have important implications:
- The economic costs of victimisation are a potentially important component of the social cost of crime, and relevant for considerations of (i) crime-reducing policy measures and (b) support systems for victims of crime.
- They raise the (non-trivial) question of suitable compensation for victims of crime. The answer ultimately depends on the policy aim, but estimated labour market costs could be an important input.
A remaining question is whether the impacts of victimisation differ in countries with less generous welfare systems or access to healthcare than in the Netherlands.
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