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Unemployment and crime: an empirical investigation

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  • Daniel Lee
  • Stephen Holoviak

Abstract

This paper examines the relationship between labour market conditions and various crime series in three Asia-Pacific countries: Australia, Japan and South Korea. Johansen's maximum likelihood cointegration tests are applied to annual, aggregate data to see whether there exists a long-run equilibrium relationship between unemployment and crime variables. In a society with a high unemployment rate, especially among young males, the opportunity cost of crime is relatively low so that criminal activities tend to increase. Although theoretically well-formulated, previous empirical studies of this hypothesis have yielded mixed evidence. The results of this study, however, appear to provide strong support for a long-run equilibrium relationship between unemployment and several crime series. This may be due to the use of cointegration method in the study, which is quite common in the area of economics and finance, but has not been applied extensively to the study of crime. Empirical support seems to be even stronger for the relationship between unemployment among young males and crime.

Suggested Citation

  • Daniel Lee & Stephen Holoviak, 2006. "Unemployment and crime: an empirical investigation," Applied Economics Letters, Taylor & Francis Journals, vol. 13(12), pages 805-810.
  • Handle: RePEc:taf:apeclt:v:13:y:2006:i:12:p:805-810
    DOI: 10.1080/13504850500425105
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    References listed on IDEAS

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    1. Papps, Kerry L. & Winkelmann, Rainer, 1998. "Unemployment and Crime: New Answers to an Old Question," IZA Discussion Papers 25, Institute for the Study of Labor (IZA).
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    Cited by:

    1. Cotte Poveda Alexander, 2011. "Socio-Economic Development and Violence: An Empirical Application for Seven Metropolitan Areas in Colombia," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 17(1), pages 1-23, September.
    2. Thomas A. Garrett & Lesli S. Ott, 2008. "City business cycles and crime," Working Papers 2008-026, Federal Reserve Bank of St. Louis.
    3. Halicioglu, Ferda & Andrés, Antonio R. & Yamamura, Eiji, 2012. "Modeling crime in Japan," Economic Modelling, Elsevier, vol. 29(5), pages 1640-1645.
    4. Ferda Halicioglu, 2012. "Temporal causality and the dynamics of crime in Turkey," International Journal of Social Economics, Emerald Group Publishing, vol. 39(9), pages 704-720, July.
    5. Sediq Sameem & Kevin Sylwester, 2016. "Unemployment and Homicides: Evidence from Individual Level U.S. Data," Economics Bulletin, AccessEcon, vol. 36(3), pages 1295-1305.

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