Common Trends in the US State-Level Crime. What Do Panel Data Say?
25 Pages Posted: 29 Apr 2016
Date Written: April 22, 2016
This paper aims to investigate the long-run relationship between crime, inequality, unemployment and deterrence using state-level data for the US over the period 1978-2013. The novelty of the paper is to use non-stationary panels with factor structures. The results show that: i) a simple crime model well fits the long run relationship; ii) income inequality and unemployment have a positive impact on crime, whereas deterrence displays a negative sign; iii) the effect of income inequality on crime is large in magnitude; iv) property crime is generally highly sensitive to deterrence measures based upon police activities.
Keywords: Crime, deterrence, inequality, unemployment, panel cointegration, cross-section dependence
JEL Classification: C33, E20, K40
Suggested Citation: Suggested Citation