We estimate the effect of education on participation in criminal activity using changes in state compulsory schooling laws over time to account for the endogeneity 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.
Lochner, Lance and Enrico Moretti.
2004."The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports."American Economic Review,
94(1): 155-189.DOI: 10.1257/000282804322970751