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The unemployment rate, unemployment volatility, and crime

Author

Listed:
  • Firouz Fallahi
  • Hamed Pourtaghi
  • Gabriel Rodríguez

Abstract

Purpose - The paper aims to study the effect of the unemployment rate and its volatility on crime in the USA. It proposes that not only the unemployment rate, but also its volatility affect the crime. Design/methodology/approach - First, the volatility of the unemployment rate is calculated using ARCH models. Next, using the results from the first stage the ARDL approach to cointegration is used to examine the link between the unemployment rate and its volatility on the crime. Findings - The cointegrated or long‐run relationships are found only for burglary and motor‐vehicle theft. The results indicate that the unemployment rate has a significant effect on burglary and motor‐vehicle theft only in the short run and the unemployment volatility has a negative effect on motor‐vehicle theft regardless of time span. However, it has a positive effect on burglary in the short run and no effect in the long run. Originality/value - The effect of unemployment rate on crime is documented in the literature. However, to the best of our knowledge, this is the first paper that emphasizes the importance of unemployment rate volatility on the crime.

Suggested Citation

  • Firouz Fallahi & Hamed Pourtaghi & Gabriel Rodríguez, 2012. "The unemployment rate, unemployment volatility, and crime," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 39(6), pages 440-448, May.
    • Handle: RePEc:eme:ijsepp:v:39:y:2012:i:6:p:440-448
    DOI: 10.1108/03068291211224937
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    References listed on IDEAS

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    1. Roy M. Howsen & Stephen B. Jarrell, 1987. "Some Determinants of Property Crime: Economic Factors Influence Criminal Behavior But Cannot Completely Explain the Syndrome," American Journal of Economics and Sociology, Wiley Blackwell, vol. 46(4), pages 445-457, October.
    2. Raphael, Steven & Winter-Ember, Rudolf, 2001. "Identifying the Effect of Unemployment on Crime," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 259-283, April.
    3. Nelson, Daniel B, 1991. "Conditional Heteroskedasticity in Asset Returns: A New Approach," Econometrica, Econometric Society, vol. 59(2), pages 347-370, March.
    4. Ayse Imrohoroglu & Antonio Merlo & Peter Rupert, 2004. "What Accounts For The Decline In Crime?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 707-729, August.
    5. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    6. Firouz Fallahi & Gabriel Rodríguez, 2007. "Using Markov-Switching Models to Identify the Link between Unemployment and Criminality," Working Papers 0701E, University of Ottawa, Department of Economics.
    7. Corman, Hope & Mocan, Naci, 2005. "Carrots, Sticks, and Broken Windows," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 235-266, April.
    8. Elliott, Graham & Rothenberg, Thomas J & Stock, James H, 1996. "Efficient Tests for an Autoregressive Unit Root," Econometrica, Econometric Society, vol. 64(4), pages 813-836, July.
    9. Bollerslev, Tim, 1986. "Generalized autoregressive conditional heteroskedasticity," Journal of Econometrics, Elsevier, vol. 31(3), pages 307-327, April.
    10. Grogger, Jeff, 1998. "Market Wages and Youth Crime," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 756-791, October.
    11. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
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    1. Barros, Pedro Henrique Batista de & Baggio, Isadora Salvalaggio & Stege, Alysson Luiz & Hilgemberg, Cleise Maria de Almeida Tupich, 2019. "Economic development and crime in Brazil: a multivariate and spatial analysis," Revista Brasileira de Estudos Regionais e Urbanos, Associação Brasileira de Estudos Regionais e Urbanos (ABER), vol. 13(1), pages 1-22, June.
    2. Serife Merve Kosaroglu, 2022. "Issizlik, Gelir, Nufus ve Suc Duzeyi Arasindaki Iliskinin Turkiye Icin Analizi," Journal of Social Policy Conferences, Istanbul University, Faculty of Economics, vol. 0(82), pages 35-52, June.
    3. Ajide, Folorunsho M., 2021. "Fiscal Policy and Crime Rate in Nigeria," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.

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