The impact of economic opportunity on criminal behavior: Evidence from the fracking boom

Abstract

Theory suggests crime should decrease as economic opportunities increase the returns to legal activities. However, the current literature shows crime increases when areas experience fracking, a source of increased local economic opportunity. This paper reconciles this puzzle by separating out existing residents and isolating local economic effects from changing composition. Specifically, I exploit within- and across-county variation in fracking activities in North Dakota using individual-level data on incumbent residents, mineral lease records, and criminal charges. The results rule out increases in crime for these existing residents and suggest a modest decrease. These results are consistent with theory and in contrast to the observed aggregate increases in crime from fracking, highlighting the importance of compositional changes.