Effects of Family Background on Crime Participation and Criminal Earnings: An Empirical Analysis of Siblings

This study exploits the sibling structure of the National Longitudinal Survey of Youth data to measure the degree to which family background explains the variance in the propensity to engage in criminal activities and in the intensity and success of crime participation as measured by the level of criminal earnings. A multiple-equation model whose reduced form disturbances are connected by a common unobservable variable having a variance-components structure is developed and estimated. Estimation results indicate a high level of association (net of observable measures of family background) between the unobserved factors affecting siblings' propensity to engage in criminal activities in a family, with estimated intra-family correlations ranging from 0.44 to 0.55. Sharing a common family background explains around 25% of the variance of the unconditional criminal income. The results suggest that ignoring family background effects leads to a significant upward bias in the effects of race and education on the propensity to engage in income-generating crime.