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Estimating an economic model of crime using panel data from North Carolina

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  • Badi H. Baltagi

    (Department of Economics and Center for Policy Research, 426 Eggers Hall, Syracuse University, Syracuse, New York, 13244-1020)

Abstract

This paper replicates the Cornwell and Trumbull (1994) estimation of a crime model using panel data on 90 counties in North Carolina over the period 1981-1987. While the Between and Within estimates are replicated, the fixed effects 2SLS as well as the 2SLS estimates are not. In fact, the fixed effects 2SLS estimates turn out to be insignificant for all important deterrent variables as well as legal opportunity variables. We argue that the usual Hausman test, based on the difference between fixed effects and random effects, may lead to misleading inference when endogenous variables of the conventional simultaneous equation type are among the regressors. We estimate the model using random effects 2SLS and perform a Hausman test based on the difference between fixed effects 2SLS and random effects 2SLS. We cannot reject the consistency of the random effects 2SLS estimator and this estimator yields plausible and significant estimates of the crime model. This result should be tempered by the legitimacy of the chosen instruments. Copyright © 2006 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 21 (2006)
Issue (Month): 4 ()
Pages: 543-547

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Handle: RePEc:jae:japmet:v:21:y:2006:i:4:p:543-547

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  1. Baltagi, Badi H., 1981. "Simultaneous equations with error components," Journal of Econometrics, Elsevier, vol. 17(2), pages 189-200, November.
  2. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-65, May-June.
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Cited by:
  1. Lauridsen, Jørgen T. & Zeren, Fatma & Ari, Ayse, 2014. "Is crime in Turkey economically rational?," Discussion Papers of Business and Economics 3/2014, Department of Business and Economics, University of Southern Denmark.
  2. Fabio Pammolli & Nicola Carmine Salerno, 2008. "Demografia, occupazione, produttività: il federalismo e la sfida della crescita nel Mezzogiorno," Working Papers 02-2008, Competitività Regole Mecati (CERM).
  3. Cerro, Ana María & Ortega, Ana Carolina, 2012. "Sources of Regional Crime Persistence Argentina 1980-2008," MPRA Paper 44482, University Library of Munich, Germany.
  4. Cerro, Ana María & Rodríguez Andrés, Antonio, 2011. "Typologies of Crime in the Argentine Provinces. A Panel Study 2000-2008," MPRA Paper 44460, University Library of Munich, Germany.
  5. Entorf, Horst, 2012. "Certainty and Severity of Sanctions in Classical and Behavioral Models of Deterrence: A Survey," IZA Discussion Papers 6516, Institute for the Study of Labor (IZA).
  6. Hitzhusen, Frederick J. & Jeanty, Pierre Wilner, 2006. "Analyzing the Effects of Conflicts on Food Security in Developing Countries: An Instrumental Variable Panel Data Approach," 2006 Annual meeting, July 23-26, Long Beach, CA 21483, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Badi H. Baltagi & Long Liu, 2009. "A Note on the Application of EC2SLS and EC3SLS Estimators in Panel Data Models," Center for Policy Research Working Papers 116, Center for Policy Research, Maxwell School, Syracuse University.
  8. Jorgen Lauridsen, 2009. "Is Baltic Crime Economically Rational?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 9(1), pages 31-38, July.
  9. Laura Magazzini & Fabio Pammolli & Nicola Carmine Salerno, 2006. "La spesa farmaceutica pubblica - Analisi degli ultimi anni e indicazioni per una nuova politica economica," Working Papers 03-2006, Competitività Regole Mecati (CERM).
  10. Rosetta Lombardo & Marianna Falcone, 2011. "Crime And Economic Performance. A Cluster Analysis Of Panel Data On Italy'S Nuts 3 Regions," Working Papers 201112, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  11. De Bandt, O. & Bruneau, C. & El Amri, W., 2008. "Stress Testing and Corporate Finance," Working papers 203, Banque de France.
  12. Christian Almer & Timo Goeschl, 2010. "Environmental Crime and Punishment: Empirical Evidence from the German Penal Code," Land Economics, University of Wisconsin Press, vol. 86(4), pages 707-726.
  13. Wu, Jianhong & Li, Guodong, 2014. "Moment-based tests for individual and time effects in panel data models," Journal of Econometrics, Elsevier, vol. 178(P3), pages 569-581.
  14. Lauridsen, Jorgen, 2010. "Is Polish Crime Economically Rational?," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 40(2).
  15. Chiara Bonassi & Laura Magazzini & Fabio Pammolli & Massimo Riccaboni & Nicola Carmine Salerno, 2007. "La spesa farmaceutica territoriale convenzionata: il modello FarmaRegio per l'analisi della variabilità regionale," Working Papers 03-2007, Competitività Regole Mecati (CERM).
  16. Steve Cook & Duncan Watson, 2013. "Breaks and Convergence in U.S. Regional Crime Rates: Analysis of Their Presence and Implications," Social Sciences, MDPI, Open Access Journal, vol. 2(3), pages 180-190, August.
  17. Aaron Chalfin & Justin McCrary, 2013. "The Effect of Police on Crime: New Evidence from U.S. Cities, 1960-2010," NBER Working Papers 18815, National Bureau of Economic Research, Inc.

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