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Is crime cointegrated with income and unemployment?: A panel data analysis on selected European countries

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Author Info

  • Baharom, A.H.
  • Habibullah, M.S.

Abstract

This paper examines the causality between income, unemployment and crime in 11 European countries employing the panel data analysis for the period 1993-2001 for both aggregated (total crime) and disaggregated (subcategories) crime data. Fixed and random effect models are estimated to analyze the impact of income and unemployment on total crime and various disaggregated categories of criminal activities. Hypothesis tests show that random effect model should be used for all (namely total crime, motor vehicle crime, domestic burglary, and violent crime) except for drug trafficking. Our results indicate that both income and unemployment have meaningful relationship with both aggregated and disaggregated crime. Crime exhibits positive significant relationship with income for all the categories except for domestic burglary, whereby it is significantly negative relationship. Crime also shows positive significant relationship with unemployment except for violent crime, whereby it is significantly negative relationship. The results also show strong country specific effect in determining the crime level.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11927.

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Date of creation: 16 Oct 2008
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Handle: RePEc:pra:mprapa:11927

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Keywords: income; unemployment; crime; Europe; panel data analysis;

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References

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  1. John Chisholm & Chongwoo Choe, 2005. "Income variables and the measures of gains from crime," Oxford Economic Papers, Oxford University Press, vol. 57(1), pages 112-119, January.
  2. Manishi Prasad & Peter Wahlqvist & Rich Shikiar & Ya-Chen Tina Shih, 2004. "A," PharmacoEconomics, Springer Healthcare | Adis, Springer Healthcare | Adis, vol. 22(4), pages 225-244.
  3. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(3), pages 521-65, May-June.
  4. Dahlberg, Matz & Gustavsson, Magnus, 2005. "Inequality and crime: separating the effects of permanent and transitory income," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2005:19, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  5. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "What causes violent crime?," European Economic Review, Elsevier, Elsevier, vol. 46(7), pages 1323-1357, July.
  6. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "Inequality and Violent Crime," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 45(1), pages 1-40, April.
  7. Paresh Kumar Narayan & Russell Smyth, 2004. "Crime rates, male youth unemployment and real income in Australia: evidence from Granger causality tests," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(18), pages 2079-2095.
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Cited by:
  1. Hamzah, Siti Nur Zahara & Lau, Evan, 2013. "The Role of Social Factors in Explaining Crime," MPRA Paper 43518, University Library of Munich, Germany.

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