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Unemployment and crime: an empirical investigation

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Author Info
Daniel Y. Lee
Stephen J. Holoviak

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Abstract

This paper examines the relationship between labour market conditions and various crime series in three Asia-Pacific countries: Australia, Japan and South Korea. Johansen's maximum likelihood cointegration tests are applied to annual, aggregate data to see whether there exists a long-run equilibrium relationship between unemployment and crime variables. In a society with a high unemployment rate, especially among young males, the opportunity cost of crime is relatively low so that criminal activities tend to increase. Although theoretically well-formulated, previous empirical studies of this hypothesis have yielded mixed evidence. The results of this study, however, appear to provide strong support for a long-run equilibrium relationship between unemployment and several crime series. This may be due to the use of cointegration method in the study, which is quite common in the area of economics and finance, but has not been applied extensively to the study of crime. Empirical support seems to be even stronger for the relationship between unemployment among young males and crime.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Applied Economics Letters.

Volume (Year): 13 (2006)
Issue (Month): 12 (October)
Pages: 805-810
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Handle: RePEc:taf:apeclt:v:13:y:2006:i:12:p:805-810

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. 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. [Downloadable!] (restricted)
  2. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November. [Downloadable!] (restricted)
  3. Papps, Kerry & Winkelmann, Rainer, 1998. "Unemployment and Crime: New Answers to an Old Question," IZA Discussion Papers 25, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Ana María Cerro & Osvaldo Meloni, 2005. "Determinants of the Crime Rate in Argentina during the 90's," Law and Economics 0504001, EconWPA. [Downloadable!]
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Cited by:
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  1. Thomas A. Garrett & Lesli S. Ott, 2008. "City business cycles and crime," Working Papers 2008-026, Federal Reserve Bank of St. Louis. [Downloadable!]
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