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Identifying the Effect of Unemployment on Crime

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  • Raphael, Steven
  • Winter-Ember, Rudolf

Abstract

In this paper, we analyze the relationship between unemployment and crime. Using U.S. state data, we estimate the effect of unemployment on the rates of seven felony offenses. We control extensively for state-level demographic and economic factors and estimate specifications that include state-specific time trends, state effects, and year effects. In addition, we use prime defense contracts and a state-specific measure of exposure to oil shocks as instruments for unemployment rates. We find significantly positive effects of unemployment on property crime rates that are stable across model specifications. Our estimates suggest that a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate. The evidence for violent crime is considerably weaker. However, a closer analysis of the violent crime of rape yields some evidence that the employment prospects of males are weakly related to state rape rates. Copyright 2001 by the University of Chicago.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 44 (2001)
Issue (Month): 1 (April)
Pages: 259-83

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Handle: RePEc:ucp:jlawec:v:44:y:2001:i:1:p:259-83

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  1. Ann Dryden Witte & Helen Tauchen, 1994. "Work and Crime: An Exploration Using Panel Data," NBER Working Papers 4794, National Bureau of Economic Research, Inc.
  2. Entorf, Horst & Spengler, Hannes, 1998. "Socio-economic and demographic factors of crime in Germany: evidence from panel data of the German states," ZEW Discussion Papers 98-16, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Lott, John R, Jr & Mustard, David B, 1997. "Crime, Deterrence, and Right-to-Carry Concealed Handguns," The Journal of Legal Studies, University of Chicago Press, vol. 26(1), pages 1-68, January.
  4. Grogger, Jeffrey, 1995. "The Effect of Arrests on the Employment and Earnings of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 51-71, February.
  5. Nagin, Daniel & Waldfogel, Joel, 1995. "The effects of criminality and conviction on the labor market status of young British offenders," International Review of Law and Economics, Elsevier, vol. 15(1), pages 109-126, January.
  6. Ruhm, Christopher J., 1995. "Economic conditions and alcohol problems," Journal of Health Economics, Elsevier, vol. 14(5), pages 583-603, December.
  7. Levitt, Steven D, 1996. "The Effect of Prison Population Size on Crime Rates: Evidence from Prison Overcrowding Litigation," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 319-51, May.
  8. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
  9. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-91, October.
  10. Christopher J. Ruhm, 2000. "Are Recessions Good For Your Health?," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 617-650, May.
  11. Witte, Ann D & Tauchen, Helen, 1994. "Work and Crime: An Exploration Using Panel Data," Public Finance = Finances publiques, , vol. 49(Supplemen), pages 155-67.
  12. Papps, Kerry L. & Winkelmann, Rainer, 1998. "Unemployment and Crime: New Answers to an Old Question," IZA Discussion Papers 25, Institute for the Study of Labor (IZA).
  13. Hooker, Mark A & Knetter, Michael M, 1997. "The Effects of Military Spending on Economic Activity: Evidence from State Procurement Spending," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(3), pages 400-421, August.
  14. Corman, Hope & Joyce, Theodore & Lovitch, Norman, 1987. "Crime, Deterrence and the Business Cycle in New York City: A VAR Approach," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 695-700, November.
  15. Steven J. Davis & Prakash Loungani & Ramamohan Mahidhara, 1997. "Regional labor fluctuations: oil shocks, military spending, and other driving forces," International Finance Discussion Papers 578, Board of Governors of the Federal Reserve System (U.S.).
  16. Freeman, Scott & Grogger, Jeffrey & Sonstelie, Jon, 1996. "The Spatial Concentration of Crime," Journal of Urban Economics, Elsevier, vol. 40(2), pages 216-231, September.
  17. Steven D. Levitt, 1995. "Using Electoral Cycles in Police Hiring to Estimate the Effect of Policeon Crime," NBER Working Papers 4991, National Bureau of Economic Research, Inc.
  18. Viscusi, W Kip, 1986. "The Risks and Rewards of Criminal Activity: A Comprehensive Test of Criminal Deterrence," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 317-40, July.
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