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Does Unemployment Increase Crime?: Evidence from U.S. Data 1974–2000

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  • Ming-Jen Lin

Abstract

OLS may understate the effect of unemployment on crime because of the endogeneity problem (Raphael and Winter-Ember 2001). In this paper, we use changes in the real exchange rate, state manufacturing sector percentages, and state union membership rates as novel instrumental variables to carry out 2SLS estimations. We find a one-percentage-point increase in unemployment would increase property crime by 1.8 percent under the OLS method, but that the elasticity goes up to 4 percent under 2SLS. The larger 2SLS effect has significant policy implications because it explains 30 percent of the property crime change during the 1990s.

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File URL: http://jhr.uwpress.org/cgi/reprint/43/2/413
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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 43 (2008)
Issue (Month): 2 ()
Pages: 413-436

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Handle: RePEc:uwp:jhriss:v:43:y:2008:i:2:p:413-436

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Web page: http://jhr.uwpress.org/

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Cited by:
  1. Paolo Buonanno & Leopoldo Fergusson & Juan F. Vargas, 2014. "The Crime Kuznets Curve," DOCUMENTOS CEDE 011012, UNIVERSIDAD DE LOS ANDES-CEDE.
  2. Duha Tore Altindag, . "Crime and Unemployment: Evidence from Europe," Departmental Working Papers 2009-13, Department of Economics, Louisiana State University.
  3. 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).
  4. Hope Corman & Naci H. Mocan, 2013. "Alcohol Consumption, Deterrence and Crime in New York City," NBER Working Papers 18731, National Bureau of Economic Research, Inc.
  5. Nordin , Martin, 2014. "Does Eligibility for Tertiary Education Affect Crime Rates? Quasi-Experimental Evidence," Working Papers 2014:14, Lund University, Department of Economics.
  6. Richard T. Boylan & Naci H. Mocan, 2009. "Intended and Unintended Consequences of Prison Reform," NBER Working Papers 15535, National Bureau of Economic Research, Inc.
  7. Florian Baumann & Tim Friehe, 2013. "Status Concerns as a Motive for Crime?," CESifo Working Paper Series 4225, CESifo Group Munich.
  8. Naci H. Mocan & Bulent Unel, 2011. "Skill-biased Technological Change, Earnings of Unskilled Workers, and Crime," NBER Working Papers 17605, National Bureau of Economic Research, Inc.
  9. Povilas Lastauskas & Eirini Tatsi, 2013. "Spatial Nexus in Crime and unemployment in Times of crisis: Evidence from Germany," Cambridge Working Papers in Economics 1359, Faculty of Economics, University of Cambridge.
  10. Sieger, Philip, 2013. "Job Losses and Criminal Gains: Analyzing the Effect of Unemployment on Criminal Activity," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79929, Verein für Socialpolitik / German Economic Association.
  11. Hope Corman & Dhaval M. Dave & Nancy E. Reichman, 2013. "Effects of Welfare Reform on Women’s Crime," NBER Working Papers 18887, National Bureau of Economic Research, Inc.
  12. repec:hal:wpaper:halshs-00623804 is not listed on IDEAS
  13. Mustard, David B., 2010. "How Do Labor Markets Affect Crime? New Evidence on an Old Puzzle," IZA Discussion Papers 4856, Institute for the Study of Labor (IZA).
  14. Brugård, Kaja Høiseth & Falch, Torberg, 2013. "Post-compulsory education and imprisonment," Labour Economics, Elsevier, vol. 23(C), pages 97-106.

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