The externalities of crime: The effect of criminal involvement of parents on the educational attainment of their children

•We examine the effects of parents’ criminal involvement on education of their children.•Education of parents should be taken into account in analyzing these effects.•Matching allows us to correct for between-household differences.•Having criminally involved parents decreases educational attainment of children.

The empirical literature on education and crime suggests that both criminal behavior and educational attainment are transferred from parents to children. However, the impact of criminal behavior of parents on educational outcomes of children is generally ignored, even though the entailed social costs may be substantial. This study examines the effect of parents’ criminal involvement on the educational attainment of their children. To identify this effect, we combine a multinomial logit model with a Mahalanobis matching approach. The findings suggest that having criminally involved parents (1) increases the probability of finishing primary education as the highest education level attained (7–9 percentage points), and (2) decreases the probability of attaining higher education (2–6 percentage points). These results are robust to various specifications and are unlikely to be fully driven by differences in unobservables.