Identifying the Effect of Unemployment on Crime

Posted: 14 Nov 2000

See all articles by Steven P. Raphael

Steven P. Raphael

University of California, Berkeley

Rudolf Winter-Ebmer

Johannes Kepler University Linz - Department of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

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Abstract

In this paper, we pursue several strategies to identify the effect of unemployment rates on crime rates. Using a state-level panel for the period from 1971 to 1997, we estimate the effect of unemployment on the rates of seven felony offenses. We control extensively for state-level demographic and economic factors and estimate specifications that allow for state-specific time trends as well as state and year fixed effects. In addition, we use prime defense contracts per-capita and a state-specific measure of exposure to oil shock as instruments for state unemployment rates. We find sizable and significant effects of unemployment on property crime rates that are stable across model specifications and estimation methodology. Our most conservative estimates suggest that nearly 40 percent of the decline in property crime rates during the 1990s is attributable to the concurrent decline in the unemployment rate. The evidence for violent crime is considerably weaker. However, a closer analysis of the violent crime of rape yields some evidence that the employment prospects of males are weakly related to state rape rates.

Keywords: Unemployment, Crime

JEL Classification: J6, K42

Suggested Citation

Raphael, Steven P. and Winter-Ebmer, Rudolf, Identifying the Effect of Unemployment on Crime. Available at SSRN: https://ssrn.com/abstract=242571

Steven P. Raphael

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Rudolf Winter-Ebmer (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8236 (Phone)
+43 732 2468 8238 (Fax)

HOME PAGE: http://www.econ.jku.at/winter

Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )

Stumpergasse 56
A-1060 Vienna, A-1060
Austria

HOME PAGE: http://www.ihs.ac.at

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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