Laserfiche WebLink
Do Liquor Stores Increase Crime and Urban Decay? <br />Evidence from Los Angeles <br />Bing-ru Teht <br />University of California, Berkeley <br />Job Market Paper <br />This Version: December 11, 2007 <br />Abstract <br />Liquor stores are a common sight in many distressed neighborhoods. But does the <br />presence of liquor stores actually cause crime and urban decay — as suggested by <br />situational models of criminal activity — or are liquor stores more likely to open in <br />declining neighborhoods? In this paper, I use administrative data on the locations of <br />alcohol outlets in the city of Los Angeles, merged with detailed incident crime reports <br />and property transactions, to evaluate the effects of alcohol outlet openings and closings <br />on local crime rates and property values. I specify an event -study framework to measure <br />the changes in violent and property crimes just after the opening and closing of outlets. <br />Both types of crime increase following an outlet opening, with larger effects in the <br />immediate vicinity of the new outlet. The overall impact of new outlet openings is driven <br />by effects in low socioeconomic status (SES) neighborhoods: openings in high -SES <br />neighborhoods only have small effects on property crime. Outlet closings have smaller <br />impacts, on average, although there is some indication that the closing of an outlet in a <br />low -SES neighborhood reduces crime. A parallel analysis of residential property <br />transaction values find that outlets located in low -SES neighborhoods are seen as a <br />disamenity, whereas outlets located in high -SES neighborhoods are valued by <br />homeowners. Overall, it appears that additional alcohol outlets — especially in lower -SES <br />neighborhoods — contribute to both crime and urban decay. <br />t I am indebted to my advisor, David Card, for his invaluable advice and support. I also thank David Autor, <br />Kenneth Chay, Robert Edelstein, Chang -Tai Hsieh, Jed Kolko, Robert MacCoun, Andrey Pavlov, John <br />Quigley, Stephen Raphael, Debbie Reed, Emmanuel Saez and seminar participants at UC Berkeley, MIT, <br />PPIC and SOLE 2006 meetings for insightful comments. Stephen Cauley generously shared his housing <br />transactions data. David Kurano, George Lamy, Carol McDonough and Scott Wiles were instrumental <br />during the data collection process. Daniel Sheehan and Lisa Sweeney assisted with GIS programming. <br />Financial support from the Center for Labor Economics, Institute of Business and Economic Research and <br />the Public Policy Institute of California are gratefully acknowledged. The views expressed herein are those <br />of the author alone and do not necessarily reflect those of the funding agencies. All errors are my own. <br /># Department of Economics, University of California at Berkeley. E-mail: bteh@econ.berkeley.edu <br />