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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. Duha Tore Altindag, . "Crime and Unemployment: Evidence from Europe," Departmental Working Papers 2009-13, Department of Economics, Louisiana State University.
  2. 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.
  3. 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).
  4. 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.
  5. Baumann, Florian & Friehe, Tim, 2013. "Status concerns as a motive for crime?," DICE Discussion Papers 93, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  6. repec:hal:wpaper:halshs-00623804 is not listed on IDEAS
  7. Florian Baumann & Tim Friehe, 2013. "Status Concerns as a Motive for Crime?," CESifo Working Paper Series 4225, CESifo Group Munich.
  8. 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).
  9. Richard T. Boylan & Naci H. Mocan, 2009. "Intended and Unintended Consequences of Prison Reform," NBER Working Papers 15535, National Bureau of Economic Research, Inc.

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