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The Growth-Crime Relationship: Are There any Asymmetries?

Author

Listed:
  • Eleftherios Goulas

    (Department of Economics, University of Patras, Greece)

  • Athina Zervoyianni

    (Department of Economics, University of Patras, Greece; The Rimini Centre for Economic Analysis (RCEA), Italy)

Abstract

We examine the relationship between crime and per-capita output growth in a panel of 26 countries for 1995-2009, focusing on the various channels through which crime can constrain growth and exploring the extent to which these channels are influenced by economic conditions. A simple structural growth model serves as a guide for the empirical specification and a reference point for the interpretation of the empirical results. Our estimates suggest significant potential gains from reducing crime during periods of worsening economic conditions, when market sentiments are pessimistic, and thus uncertainty regarding the return to saving is above average, employment is low, and the strain on government-sector resources through high public-safety spending is already sizable. Crime does not seem to be so harmful to growth when economic conditions are sufficiently satisfactory. In this respect, our results provide an explanation for the inconclusive empirical evidence, based on reduced-form models, regarding the strength of the growth-crime relationship.

Suggested Citation

  • Eleftherios Goulas & Athina Zervoyianni, 2013. "The Growth-Crime Relationship: Are There any Asymmetries?," Working Paper series 54_13, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:54_13
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    More about this item

    Keywords

    economic growth; crime;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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