Econ Seminar: Elira Kuka, George Washington University

Most research on the safety net focuses on understanding its effects on recipients and their families. We show that these effects may extend beyond the family. We use a regression discontinuity design and administrative data to study a Danish policy that drastically cut welfare benefits for refugees, leading to increased property crime for the affected refugees. We link these refugees to their neighbors, and show large increases in property crime among non-Danish neighbors – who likely interacted more with the refugees – and no effects on Danish ones. While there are several mechanisms that could lead to spillover effects in crime, such as changes in neighbors’ employment and utilization of welfare benefits or changes in policing strategies, our results are consistent with peer effects in crime.