Answer:
We estimate the effect of education on participation in criminal activity using
changes in state compulsory schooling laws over time to account for the endoge-
neity of schooling decisions. Using Census and FBI data, we find that schooling
significantly reduces the probability of incarceration and arrest. NLSY data indicate
that our results are caused by changes in criminal behavior and not differences in
the probability of arrest or incarceration conditional on crime. We estimate that the
social savings from crime reduction associated with high school graduation (for
men) is about 14–26 percent of the private return. (JEL I2, K42)
