Neighborhood peer effects on youth crime: natural experimental evidence

We investigate the degree to which disadvantaged neighborhood peers influence disadvantaged youths' and young adults' propensity to commit criminal offenses, identifying causal effects with the allocation of social housing in Copenhagen. We find that those living in the same social housing development who have been previously charged only for drug possession cause more youth criminality, but those with no criminal records or records involving other offenses do not. Youth exposed to a one percentage point higher neighborhood concentration of drug possession offenders have a 4.2% higher probability of being criminally charged (a 16.7% increase with respect to the sample mean).