Introduction

Economics is the study of how humans make individual, family, business, or societal decisions when faced with scarcity of goods, services, and resources.[1] While the terms economic growth and economic development are commonly used interchangeably, they are often measured very differently. Economic growth is typically measured by changes in gross national product and gross domestic product. Economic development is measured by changes in socioeconomic factors, such as improvement in the quality/availability of housing, increased life expectancy, increased per capita earning rates, and decreased poverty rates.[2]

Through economic development, communities are able to place their economies on a higher growth trajectory and make an impact on poverty levels.[3] According to the U.S. Census Bureau, 38.1 million people were living in poverty in 2018, roughly 12% of the U.S. population.[4] Similarly, just over 12% of Illinois residents were living in poverty in 2018, accounting for 1.6 million people.[5] Those living in poverty are more likely to suffer long- and short-term negative health outcomes, as well as experience violence.[6] Further, research has identified several evidence-based risk factors that contribute to future criminal activity, many with direct links to poverty and its consequences. These correlated negative outcomes may lead to a cycle of poverty and disadvantage. Economic development can be one way to interrupt this cycle and increase opportunities for positive outcomes.

Poverty as a Criminal Risk Factor

There are five evidence-based ecological domains that impact human development and have been found to predict future criminal offending: individual, family, peer, school, and community.[7] These domains include factors that can increase the likelihood of offending (risk factors) and factors that decrease the likelihood of offending (protective factors).[8] Additionally, risk and protective factors can be dynamic, with characteristics that can change over time, or static, where historical characteristics cannot be changed.[9] The U.S. Office of Juvenile Justice and Delinquency Prevention notes risk factors can both directly and indirectly impact an individual’s overall risk.[10] This can be seen with poverty, an economic condition labeled as a familial risk factor for future offending, which has a direct relationship with factors in all other domains. The (typically complex) relationships between poverty and select criminogenic risk factors are examined below. It is important to note that the directionality of these relationships is complicated, and empirical research has not yet disentangled whether poverty produces these risk factors or whether a combination of risk factors produces poverty.

Individual

Criminal behavior peaks in adolescence and decreases in adulthood—a phenomenon known as the “age-crime curve”.[11] Research links poverty to an increased risk of juvenile antisocial behavior, which has an impact on future criminal behavior as an adult.[12] Research indicates impulsive youth living in poor neighborhoods—identified by neighborhood socioeconomic variables including percentages of families below the poverty line, unemployed men over 18, and female-lead households—are at greater risk for criminal offending than impulsive youth living in more prosperous neighborhoods.[13] Additionally, research suggests poor youth are more likely to have been exposed to violence (through indicators such as child abuse/neglect and violent crime victimization).[14] Childhood exposure to violence as a child and cognitive/neurological deficits are risk factors for future delinquency.[15] Studies have shown that poor youth are more likely to have experienced negative cognitive outcomes in their lives, such as a developmental delays or learning disabilities, than youth who are not living in poverty.[16] This highlights the complicated relationship between poverty and individual risk factors for delinquency.

Family

Research indicates poverty, poor parental/child relationships, and harsh, lax, or inconsistent discipline are all risk factors for future criminal offending.[17] These risk factors are quite often interconnected in families living in poverty. Research has found that poverty can increase anxiety and depression in parents, which can increase punitive and inconsistent parenting and decrease the stability of a parent-child relationship.[18] A 2001 study found that the effects of poverty on single-mother families were mediated by maternal depression and use of physical punishment¬—the stress experienced by single mothers living in poverty increased depression rates, which, in turn, increased their use of physical punishment.[19] A 2007 study analyzing a national of over 21,000 kindergarteners found parental stress resulting from poverty and material hardship increased the likelihood of problem behavior in children.[20] Data indicates that peer pressure and neighborhood problems also impact antisocial behavior in youth.[21]

School

Studies show poor school performance and academic failure may increase the risk for criminal behavior.[22] Research indicates a relationship between child poverty and poor school performance.[23] This relationship may be due to poverty’s impact on children’s development; poverty may impact the way the brain develops, which in turn impacts school performance.[24] Specifically, studies have found that children living in poverty have a lower volume of gray matter in parts of the brain that are associated with school readiness skills.[25] Researchers are unsure why this association exists, but many suggest this could be due in part to stress typically experienced by children in low-income families.[26]

Attendance at poor-functioning schools has been linked to delinquency and are considered a risk factor for future offending.[27] Increased spending per student has been linked to better student outcomes, suggesting that schools with less money to spend on students place students at a disadvantage.[28] Further, research indicates schools that serve predominately low-income students tend to experience increased teacher turnover. This can contribute to an inadequate school climate, a factor that has been linked to an increased risk for future criminal offending.[29] Typically, schools in districts with a higher percentage of low-income families are less likely to have wealth due to a decreased capacity to raise local funds.[30] While many states aim to counteract this by providing funding to poverty-stricken schools, data suggests that states still distribute more funding to schools with students who are not living in poverty.[31]

Peer Group

Involvement with delinquent peers has been found to increase one’s risk for future delinquency.[32] Research has found that indicators of neighborhood disadvantage, such as per capita income, proportion of households receiving public assistance, and proportion of households living under the poverty line, are directly linked to youth’s association with deviant peers.[^33] While the direction of this relationship is not clear, the evidence highlights an important connection between disadvantage and youth involvement with delinquent peers, raising concerns that poverty may enable or contribute to delinquent associations and put youth at risk for future offending.

Community

A 2006 study found that neighborhood disadvantage also places children at risk for early onset antisocial behavior and later criminal offending.[^34] Neighborhood disorganization, which typically includes concentrated poverty, low social cohesion, and a general feeling among community members of a lack of safety in a neighborhood, also has been found to be a risk factor for future delinquency.[33] Additionally, youth living in communities with greater residential instability and higher rates of crime are at a greater risk for future offending.[34] Research indicates residents of low-income households move at higher rates than those in households with higher levels of income.[35] Low-income families often are forced to move in response to evictions, income instability, family conflict, and substandard housing conditions.[36] While movement can be positive if a family is moving into a more affluent community, many low-income households move into another low-income area.[37]

Traditional Economic Development Programming

Economic development programming should be based on the short and long-term goals of a state, region, or community. Table 1 describes five action principles that are important in effective economic development. These principles are not all easily accomplished, but they are important to keep in mind when developing economic policies and programs.

Table 1

Economic Development Action Principles

Action Principle Decription
Set the right goals Set long-term goals that result in greater and more robust change while creating short-term metrics that allow for progress monitoring.
Grow from within Focus on strengthening assets rather than relying on recruiting from elsewhere.
Boost trade Support and promote trade with other markets that bring in new resources and income.
Invest in people and skills Build partnerships that can align employer needs with the workers seeking employment.
Connect place Connect local communities to regional markets.
Adapted from Liu, A. (2016). Remaking economic development: The markets and civics of continuous growth and prosperity. Washington, DC: The Brookings Institution.

Rigorously designed evaluations of programs and practices that aim to develop economies at the local level are severely limited, but economic development programming can be typically placed into three areas:[38]

  1. Investment in communities
  2. Investment in the workforce
  3. Investment in the marketplace

Communities

By investing in communities, states aim to increase the availability of physical, social, and environmental resources to attract businesses and jobs.[39] Community-focused investments can include:

  • Infrastructure, including physical infrastructure, such as highways, airports, and railways, and information technology infrastructure such as electricity and reliable, cost-effective wireless internet.[40]
  • Education investment, including pre-K, K-12, and higher education.[41]
  • Estate renewal, or physically renewing the housing stock through demolition and refurbishment projects.[42]
  • Public realm, which can fall into two broad categories: small-scale projects (such as improving the visual appearance of local parks) and large-scale interventions (typically part of integrated projects that focus on rejuvenation and regeneration of entire communities).[43]
  • Area based initiatives, such as “Enterprise Zones,” “Empowerment Zones,” or “Opportunity Zones.” These initiatives are aimed at improving growth in specific geographic areas through tax breaks, wage subsidies, and infrastructure improvements.[44]

Workforce

Investment in the workforce is meant to build the skills of workers and connect them with jobs that have good wages and benefits.[45] By increasing access to skilled workers, states hope to meet the workforce needs of local businesses.[46] Types of workforce development programming include:

  • Occupational and job training, or training that typically does not require a four-year degree. This can include sector strategies, such as training workers for a particular industry sector, such as science, technology, or math; job skill certifications, which can help employers quickly and cost-effectively identify qualified workers; apprenticeships, in which employers hire unskilled workers and train them on the job; and career/technical education where students obtain the skills necessary to succeed in the workforce.[47]
  • Customized training programs, or incentivizing companies to train new hires in-house. These programs reimburse companies for their training program costs, develop programs through colleges, and providing financial assistance to employees training to acquire skills to meet their employers’ needs.[48]
  • Workforce intermediaries, or community coordinators that work to match job seekers with employers.[49]

Marketplace

Marketplace investment encompasses investment in businesses, with the goal of increasing jobs and wages.[50] Types of marketplace programming are:

  • Direct assistance, which include general business support, financing, and state procurement programs.[51]
  • Tax incentives, including tax credits, tax exemptions, and tax deductions.[52]

Small- and medium-sized business are typically most interested in direct assistance, while larger companies are most attracted to tax incentives.[53] In 2015, the national annual estimated value of all state and local tax incentives for marketplace investments was $45 billion.[54]

Economic Development as a Crime Prevention and Intervention Strategy

Few research studies scientifically examine “what works” in economic development,[55] and, as a result, only a small body of research exists that can provide guidance on program development. However, research suggests programming that improves labor supply and demand may have some impact on poverty and crime in communities.

Improving the Labor Supply

Research suggests that improving the quality of the labor supply (or workers in the labor pool) is an effective way of increasing access to high-quality, high-wage jobs.[56] Efforts to enhancing the labor supply can start early with access to quality, early childhood education. The most rigorous research available supports improving childhood education as a way to strengthen the labor supply.[57] One longitudinal preschool study highlighted the positive outcomes of high-risk, low-income youth when exposed to high quality preschool at a young age.[58] The study compared youth taking a high-quality preschool program to those who did not go to preschool over decades and found the preschool group:[59]

  • Graduated high school at a higher rate.
  • Were more likely to be employed at age 40.
  • Had higher median annual earnings both at age 27 and age 40.
  • Were more likely to own their own homes and have stable housing.
  • Experienced fewer lifetime arrests.

Further, high-quality preschool has been found to increase the state’s earning per capita by $6 for every $1 invested.[60] Thus, this investment increases social and economic benefits.

Research suggests that preschool investment is beneficial to all children, and that investment in other education levels (K-12 and post-secondary) are most beneficial when educational efforts are specifically directed toward certain deficiencies.[61] For example, mandatory summer school programs for students who are significantly behind in their grade levels can increase test scores and prevent students from falling further behind.[62] Cost/benefit analysis suggests that for each dollar invested in high-quality summer school programming, state resident earnings increase by $13.[63] Additionally, by remaining on track, students may be more likely to graduate high school, decreasing their risk of future criminality.[64] An evaluation of Career Academies, a “school within a school” model for high-school-aged youth that offers work experience and work sector training, found that students who participated experienced a 1% rise in earnings that persisted for at least eight years following high school.[65]

Improving Labor Demand

Labor demand (or the demand for workers) can be improved with tax incentives and/or tax cuts for businesses. Tax incentives are tax reductions for businesses in exchange for desirable actions/investments while tax cuts are general reductions in the tax rate charged.[66] Typically, policymakers promote tax incentives to encourage job growth. Research suggests business tax cuts may impact a business’s decision to move into an area more than incentives, but tax cuts tend to do little to boost local job growth.[67] Tax cuts fail to impact job growth largely because businesses determine how their tax savings will be used and there is no guarantee they will create new jobs with the money saved.[68] Thus, tax cuts could potentially be more effective for local job growth if they are conditional on savings being reinvested into the community or target only businesses committed to creating higher-paying, entry-level jobs and hiring local residents.[69] Furthermore, research suggests that opportunity zone-based tax incentives meant to encourage investment in low-income areas may not improve community economies and may instead result in gentrification.[70]

Customized job training refers to programs where the government subsidizes training (through grants) for a company’s workers, based on the specific needs of the company.[71] Training can be offered through the company or local community colleges to improve the labor supply. Research on customized job training suggests programming in this area is more effective than tax incentives, however more research is needed to fully assess the benefits of training grants.[72] Research also indicates training programs for disadvantaged workers tend to be more effective for adults rather than out-of-school youth.[73] Realizing the potential benefits of customized job training largely relies on whether businesses exist in these communities, are in need of trained employees, and have a pool of potentially qualified trainees to choose from.

Conclusion

Economic development encourages growth in the economy, increases employer and worker productivity, and enhances the standard of living for all.[74] Poverty reduction can encourage economic development in these areas. A variety of policies and programs are available to address poverty in communities. However, the ties between poverty and trauma, peer influences, neighborhood contexts, and family/individual development, suggest that addressing poverty alone may not be the most effective response. Further, a lack of experimental evidence and guidance exist on best practices in the field of economic development. Under these circumstances it may be difficult to select and implement impactful policies and/or programs for economic development. Newly proposed methods to promote economic development will need to be closely monitored and the five action principles of economic development should be prioritized—setting and reaching long-term economic development goals, supporting growth from within, connecting local communities to larger regions, boosting trade, and making investments in people and skills.[75] Policymakers should support rigorous evaluation of new economic development programs to assess their impact(s) and emphasize programs/initiatives that encourage long-term growth (e.g., training workers in a field with demand, rather than an obsolete one). By successfully addressing economic disparity, poverty, and other risk factors, policymakers can encourage economic development, reduce crime, and positively impact communities throughout the state.

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