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Economic growth and crime: Is there an asymmetric relationship?

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  • Goulas, Eleftherios
  • Zervoyianni, Athina

Abstract

We examine the relationship between crime and per-capita output growth in a panel of 26 countries for 1995–2009, focusing on the various channels through which crime can constrain growth and exploring the extent to which these channels are influenced by economic conditions. A simple structural growth model serves as a guide for the empirical specification and a reference point for the interpretation of the empirical results. Our estimates suggest significant potential gains from reducing crime during periods of worsening economic conditions, when market sentiment is pessimistic, and thus uncertainty regarding the return to saving is above average, employment is low, and the strain on government-sector resources through high public-safety spending is already sizable. Crime does not seem to be so harmful to growth when economic conditions are sufficiently satisfactory. In this respect, our results provide an explanation for the inconclusive empirical evidence, based on reduced-form models, regarding the strength of the growth–crime relationship.

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  • Goulas, Eleftherios & Zervoyianni, Athina, 2015. "Economic growth and crime: Is there an asymmetric relationship?," Economic Modelling, Elsevier, vol. 49(C), pages 286-295.
    • Handle: RePEc:eee:ecmode:v:49:y:2015:i:c:p:286-295
    DOI: 10.1016/j.econmod.2015.04.014
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    3. Pengfei Jia & King Yoong Lim & Ali Raza, 2020. "Crime, different taxation, police spending and embodied human capital," Manchester School, University of Manchester, vol. 88(5), pages 664-698, September.
    4. Roxana Guti'errez-Romero & Nayeli Salgado, 2022. "New trends in South-South migration: The economic impact of COVID-19 and immigration enforcement," Papers 2212.12797, arXiv.org.
    5. LAWAL Adedoyin Isola & AMOGU Ezinne Olufadesola & ADEOTI Johnson Olabode & IJAIYA Muftau Adeniyi, 2017. "Fraud And Business Cycle: Empirical Evidence From Fraudsters And Fraud Managers In Nigeria," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(1), pages 110-128, April.
    6. Cheng, Zhiming & Smyth, Russell, 2015. "Crime victimization, neighborhood safety and happiness in China," Economic Modelling, Elsevier, vol. 51(C), pages 424-435.
    7. René Cabral & André Varella Mollick & Eduardo Saucedo, 2019. "Foreign Direct Investment In Mexico, Crime, And Economic Forces," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 68-85, January.
    8. Adekoya Adenuga Fabian & Razak Nor Azam Abdul, 2016. "The Link Between Economic Growth, Crime and Deterrence Measures in Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 26(4), pages 24-40, November.
    9. Roberto Coronado & Eduardo Saucedo, 2019. "Drug-related violence in Mexico and its effects on employment," Empirical Economics, Springer, vol. 57(2), pages 653-681, August.
    10. Ioannis Laliotis, 2016. "Crime and unemployment in Greece: Evidence before and during the crisis," Economics and Business Letters, Oviedo University Press, vol. 5(1), pages 10-16.
    11. Roxana Gutierrez-Romero & Nayeli Salgado, 2022. "New trends in South-South migration: The economic impact of COVID-19 and immigration enforcement," Working Papers 108, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    12. Astarita, Caterina & Capuano, Carlo & Purificato, Francesco, 2018. "The macroeconomic impact of organised crime: A post-Keynesian analysis," Economic Modelling, Elsevier, vol. 68(C), pages 514-528.

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    Economic growth; Crime;

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