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Spatial Nexus in Crime and unemployment in Times of crisis: Evidence from Germany

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  • Povilas Lastauskas
  • Eirini Tatsi

Abstract

Space is important. The recent global financial crisis has vividly pointed to spatial patterns in economies’ reactions to the global economic shocks. This paper focuses on labor market responses and its interactions with criminal activities in a causal and spatial framework. we study the case of Germany as evidently this country’s economy has demonstrated resilience during the whirl of economic crisis. Our contribution is twofold: first, we lay down a parsimonious labor market model with search frictions, criminal opportunities, and, unlike earlier analyzes, productivity shocks which are important in explaining empirical regularity of criminal engagement. Second, we seek empirical support using data on the 402 German districts for 2009-2010, the years following the global financial crisis, in a setting that allows not only crime spatial multipliers but also inherent endogeneity of unemployment. Adverse income shocks clearly unfold a spatial nexus between unemployment and crime rates. More specifical ly, we find that youth unemployment plays a prominent role in explaining property crime, namely housing burglary. Our results are in line with previous research: neglecting endogeneity of unemployment understates its impact and employing the youth unemployment share instead of rate points to distinctive effects. The analysis offers important implications for countries that are currently undergoing fiscal consolidation and are experiencing high unemployment rates.

Suggested Citation

  • Povilas Lastauskas & Eirini Tatsi, 2013. "Spatial Nexus in Crime and unemployment in Times of crisis: Evidence from Germany," Cambridge Working Papers in Economics 1359, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1359
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Povilas Lastauskas & Julius Stakenas, 2015. "Global Perspective on Structural Labour Market Reforms in Europe," Cambridge Working Papers in Economics 1534, Faculty of Economics, University of Cambridge.
    2. Entorf, Horst & Sieger, Philip, 2014. "Does the Link between Unemployment and Crime Depend on the Crime Level? A Quantile Regression Approach," IZA Discussion Papers 8334, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Crime; unemployment; spatial Econometrics; Economic Crisis;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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