Identifying the Effect of Unemployment on Crime

Abstract

We would like to thank Cynthia Bansak and Lorien Rice for several helpful suggestions. We thank Lawrence Katz, Mark Hooker, Carlisle Moody, and Christopher Ruhm for providing us with state level data. This research was supported by a grant from the Austrian FFF, grant P II962-SOZ. AbstractPrevious estimates of the effect of unemployment on crime commonly omit determinants of criminal behavior that vary with the business cycle, creating correlation between unemployment rates and the residuals in aggregate crime regressions. In this paper, we employ several strategies that attempt to minimize or break this correlation and eliminate the accompanying omitted variables bias to estimates of the effect of unemployment on crime. Using a state-level panel for the period from 1970 to 1993, we explore the sensitivity of crime-unemployment elasticity estimates to explicit controls for per-capita alcohol consumption, a factor that has been shown in the past to be pro-cyclical and a partial determinant of criminal behavior. In addition, we use prime defense contracts per-capita at the state level as an instrument for state unemployment rates. Both controlling for alcohol consumption and using instrumental variables to correct for omitted variables bias yields large effects of unemployment on the seven felony offenses recorded by the Department of Justice. Moreover, in contrast to previous research, we find significant and sizable positive effects of unemployment on the rates of specific violent, as well as property crimes. JEL Codes: J6, K42Keywords: Unemployment, Crime 1 The existence of a positive significant unemployment effect varies considerably by offense, ranging from 12 and 16 percent of the studies summarized for assault and murder to 47 and 52 percent for larceny and burglary. Entorf and Spengler (1998) using a state panel for Germany also find ambiguous unemployment effects. Studies using microdata, however, generally find a high association between joblessness and criminal activity (Freeman, 1996). Moreover, the demographic composition of convicted offenders consists disproportionally of persons who would command low legitimate wages: for example, the young and relatively less educated (Grogger, 1997).

Guns, laws and public shootings in the United States

“…For example, Duggan (2001) uses gun magazine subscriptions as a proxy for gun ownership to show that more guns are associated with increased crime. Other papers show that economic factors such as unemployment rates and incomes are associated with crime rates (Becker 1968;Corman and Mocan 2005;Gould, Weinberg, and Mustard 2002;Raphael and Winter-Ebmer 2001). Another strand of literature evaluates the effects of gun legislation on crime.…”

Summer jobs reduce violence among disadvantaged youth

“…Violent crime stems from conflicts between people, so problematic cognitive and emotional responses to social interactions-including hostile attribution bias, uncontrolled anger, and "hot" decision-making-are thought to be proximal causes of youth violence in particular (35,36). Nonviolent crimes, which involve property or SCIENCE sciencemag.org 5 DECEMBER 2014 • VOL 346 ISSUE 6214 drugs more often than interpersonal conflict, may be relatively more responsive to situational and economic factors (37,38). Because OSP could affect how youth perceive and respond to social interactions differently from how it affects their economic situations, opportunities for crime, or drug use, the study estimates program effects separately by crime type.…”

Temporal Causality and the Dynamics of Crime and Delinquency

“…1 A number of studies analyzing the relationship between unemployment and crime rates tend to find small but statistically significant positive correlations between unemployment and the property crime rate, but not between unemployment and the violent crime rate. Raphael and Winter-Ebmer (2001) examine the relationship between state unemployment rates and state property crime rates for the time period from 1971 through 1997. They find that the higher unemployment rate may account for up to 1.6-2.3% of the increase in the property crime rate.…”

“…Lagged values in the delinquency and unemployment rates explain current values of the property crime rate (See Cantor and Land 1985;Raphael and Winter-Ebmer 2001;Mocan 2000, 2005;Levitt 2004; and Immergluck and Smith 2006 for a similar discussion).…”