Poverty and Crime in 19th Century Germany
Mehlum, Halvor, Edward Miguel, and Ragnar Torvik. 2006. "Poverty and Crime in 19th Century Germany." Journal of Urban Economics 59 (3): 370-388.
We estimate the impact of poverty on crime in 19th century Bavaria, Germany. Rainfall is used as an instrumental variable for grain (rye) prices to address econometric identification problems in the existing literature. The rye price was a major determinant of living standards during this period. The rye price has a positive effect on property crime: a one standard deviation increased property crime by 8%. OLS estimates are twice as large as instrumental variable estimates, highlighting the value of our empirical approach. Higher rye prices lead to significantly less violent crime, though, and we argue that higher beer prices, caused by the higher rye prices, are a likely explanation.