Exploitative Revenues, Law Enforcement, and the Quality of Government Service

Abstract

A growing body of evidence indicates that local police departments are being used to provide revenue for municipalities by imposing and collecting fees, fines, and asset forfeitures. We examine whether revenue collection activities compromise the criminal investigation functions of local police departments. We find that police departments in cities that collect a greater share of their revenue from fees solve violent and property crimes at significantly lower rates. The effect on violent crime clearance is more salient in smaller cities where police officers’ assignments tend not to be highly specialized. We find that this relationship is robust to a variety of empirical strategies, including instrumenting for fines revenue using commuting time. Our results suggest that institutional changes—such as decreasing municipal government reliance on fines and fees for revenue—are important for changing police behavior and improving the provision of public safety.