Drug Money, Police Incentives, and Crime: Evidence from Civil Asset Forfeiture

Do drug-money seizures influence police behavior? In this paper, I exploit variation from the 2015 suspension of payments under the Equitable Sharing program, a federal asset forfeiture initiative that sent monetary kickbacks to local law enforcement for policing drug crimes. Using a difference-in-differences design, I find that participating local agencies cut drug-related arrests in response to the suspension of adoptions payments by close to 5%. The decline scales with pre-suspension participation and is strongest for possession offenses and municipal police departments. Despite the decline in drug arrests, I do not find evidence that violent or property crime increased in participating jurisdictions after the suspension. Taken together, my results suggest that civil forfeiture revenue meaningfully expands drug enforcement effort, but with little identifiable impact on overall crime rates.