Digging for Trouble? Uncovering the Link Between Mining Booms and Crime

This paper evaluates the local effects of an exogenous economic shock, specifically, a mining boom, on crime levels and the mechanisms behind this relationship, including the effect of the boom on local economies’ labor market conditions. The paper contributes with empirical evidence to the literature on the impact of commodity booms, specifically mining, on criminal activities. Based on the exogeneity of the mining boom and the geographical location of minerals, I apply the synthetic control method using municipality-level data from Sweden for the period 1996-2015. This paperfocuses on the total number of crimes, which is then subdivided into crimes against persons and crimes against wealth. I find evidence that the mining boom improves the labor market conditions of mining municipalities, which translates into long-term (2013, 2014, and 2015) reductions in total crime. The evidence suggests that the improvement in labor market conditions (employment, wages, and disposable income) is the main mechanism by which the mining boom reduces crime. I find no evidence for the other mechanisms considered: the mining boom does not affect the population composition, the government’s crime prevention capacity, or the income inequality in mining municipalities.