Main Street Business Initiatives and Crime in Small Towns

Small businesses are vital to the municipalities they serve. Significant government resources and geographically-targeted economic policies are allocated toward enhancing their presence and impact on the community. In this paper, we exploit a television show contest among small towns for a $500,000 revitalization award to study the impact of place-based economic policies and business initiatives on crime. We use a difference-in-differences approach and synthetic control techniques and find significant declines in property crimes for two of the three winning towns examined. The reduction in crime grows larger after the initial year of investment indicating the effect is not driven by the contemporaneous exposure to the television show production process. We also provide suggestive first-stage evidence of economic improvements following the investment relative to the non-winning semi-finalist towns that comprise our control group. Our results shed light on the positive spillover effects of place-based initiatives and the effectiveness of these investments as a crime reduction strategy in small towns. We estimate a savings from fewer crimes of between $80,000 to $100,000 annually following the year the investment occurs