Urban Crime and Its Net Implicit Price to North Carolina Households

Abstract

This study investigates the impact of urban crime rates—property and violent—on wages and rents and estimates the net implicit monetary value of crime rates for living in metropolitan areas, using the American Community Survey 2019 data for cities in North Carolina. A seemingly unrelated regression estimation finds that the crime rates are capitalized into both wages and rents, and suggests crime rates affect wages positively and rents negatively. This investigation estimates a negative value of $51.80 per month—the average net marginal implicit price—for living in cities with high city crime rates. This negative value suggests that households are being compensated for living in cities with high crime rates.