Externalities from Recycling Laws: Evidence from Crime Rates

This paper tests whether laws that encourage bottle recycling and also increase the labor incomes of low-wage workers have the additional effect of reducing petty crime rates. A simple choice theory model of crime participation and labor supply suggests that low-wage workers may substitute time and effort away from illegal activity to legal and remunerative recycling activity. Between 1973 and 2001, eleven states and one city enacted bottle recycling laws, and this paper exploits the variation in the year of implementation of the bottle laws to measure and test for any reduction in crime rates. The results show that city-level petty crime rates in bottle law states are on average 11% lower than city-level petty crime rates in non-bottle law states. Although the primary positive benefits of recycling income go to low-income individuals, the unexpected secondary benefit of lower crime rates affects both high- and low-income individuals. (JEL Q50, K40)

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