Restrictions to pawn shop access increases property crime

See Three Golden Balls: Pawn Shops and Crime.

"32 Pages Posted: 2 Jun 2022

Bryan C. McCannon

West Virginia University - College of Business & Economics

Zachary Porreca

West Virginia University, College of Business & Economics, Department of Economics, Students

Zachary Rodriguez

Union College - Department of Economics

Date Written: May 25, 2022

Abstract

We ask what the relationship is between pawn shops and crime. The dominant narrative is that pawn shops reduce the transaction costs of crime and, consequently, promote it. We explore the alternative where pawn shops address the financial distress of those in need, which reduces the incentive to engage in crime. We exploit two distinct policies affecting access to pawn shops − severe licensing fees implemented in London in the early 1800s and state variation in the classification of pawn shops as essential businesses during the Covid-19 pandemic in spring 2020. For each, employing a difference-in-difference identification strategy, we provide evidence that restrictions to pawn shop access increases property crime."