The Effect of Gun Violence on Local Economies

C R I M E A N D J U S T I C E R E S E A R C H R E P O R T The Effect of Gun Violence on Local Economies Gun Violence, Business, and Employment Trends in Minneapolis, Oakland, and Washington, DC Yasemin Irvin-Erickson Bing Bai Annie Gurvis Edward Mohr November 2016 A B O U T T H E U R B A N I N S TI T U T E The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Copyright © November 2016. Urban Institute. Permission is granted for reproduction of this file, with attribution to the Urban Institute. Cover photo by Joshua Lott/Getty Images. C O N T E N T S III Contents Acknowledgments iv Executive Summary v The Effect of Gun Violence on Local Economies 1 Background 1 Methods 2 City Profiles 7 Results 14 Conclusions 16 Appendix A. Fixed Effects and Difference-in-Differences Estimates 18 Appendix B. Selected Retail and Service Industry Codes 22 Notes 23 References 24 About the Authors 25 Statement of Independence 26 IV A C K N O W L E D G M E N T S Acknowledgments This report was funded by Everytown for Gun Safety Support Fund, Inc. We are grateful to them and to all our funders, who make it possible for Urban to advance its mission. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Further information on the Urban Institute’s funding principles is available at www.urban.org/support. A central element of this study was obtaining access to gun homicide, gunshot, and neighborhood-level establishment data. We would like to thank the City of Minneapolis Police Department, Oakland Police Department, and Metropolitan Police Department of Washington, DC, for granting us access to their gun homicide incident data. We would also like to thank Walls & Associates and ShotSpotter, Inc., for providing us with the National Establishment Time-Series database and gunshot detection technology data. We would like to also thank Ted Alcorn, Cecily Wallman-Stokes, Sarah Tofte, Commander Scott Gerlicher, Captain Ersie Joyner, Deputy Chief John Lois, Sergeant Jeffrey Egge, Ms. Cassandra Lane, Don Walls, Mark Jones, Doris Cohen, and Joe Hawkins for their support. We owe a special thank you to our colleagues Sam Bieler, Nancy La Vigne, Janine Zweig, Akiva Liberman, Christina Plerhoples Stacy, Breno Braga, KiDeuk Kim, Mathew Lynch, Nicole Weissman, Fiona Blackshaw, Serena Lei, Vivian Hou, Benjamin Chartoff, Daniel Matos, Lydia Thompson, Kate Villarreal, and Bridget Lowell for their invaluable insight and support. E X E C U T I V E S U M M A R Y V Executive Summary We already know that gun violence exacts enormous costs. The fear of gun violence, and people’s perceived risk, has been shown to impose heavy social, psychological, and monetary burdens on individuals that translate into monetary costs to society. We also know the health care costs of treating gunshot injuries: just under $630 million in 2010 (Howell and Abraham 2013). American society collectively pays all these costs. Yet we know comparatively little about the relationship between gun violence and the economic health of neighborhoods at the most grassroots levels; we don’t know how businesses, jobs, and many more indicators of economic health respond to increased levels of gun violence. Could gun violence cause economic downturns? In communities and neighborhoods most affected by gun violence, does the presence of gun violence hold back business growth? To answer these important research questions at the neighborhood level, we assembled gun violence and establishment data at the census tract level in six US cities. This report presents the initial findings of an in-depth analysis of the relationship between gun violence and local economic health in Minneapolis, Minnesota; Oakland, California; and Washington, DC. Our findings indicate a significant relationship between gun violence and the ability of businesses to open, operate, and grow in the affected communities. The data and research findings from this study can lend a new, economically driven lens to the debate on gun safety and gun control. Highlights To understand the relationship between gun violence and the subsequent economic health of communities, we looked at how communities within three cities varied by gun violence and economic indicators. After controlling for the census tract and year effects, we found the following:  In Minneapolis, one less gun homicide in a census tract in a given year was statistically signifi