This paper examines the effects of China's 2016 coal capacity reduction policy on firms, local labor markets, and crime. We find that the policy substantially reduced the asset size and employment of coal firms in treated cities while simultaneously increasing their profitability and lowering debt. Policy-induced layoffs generated adverse spillovers in local labor markets, reducing residents' incomes, worsening public perceptions of job opportunities, and increasing divorce rates. These labor market effects were most pronounced among older and less-educated individuals. Employment also shifted away from the mining sector toward wholesale and retail trade and real estate-related industries. In addition, the policy led to an increase in crime, driven primarily by property offenses committed by individual offenders, while violent crime remained largely unchanged. A back-of-the-envelope calculation suggests that the increase in coal firms' profits exceeded the fiscal resources required for worker resettlement.