Spatial Nexus in Crime and Unemployement in Times of Crisis

Povilas Lastauskas and Eirini Tatsi

No 39, Bank of Lithuania Working Paper Series from Bank of Lithuania

Abstract: Space is important. In this paper we use the global financial crisis as an exogenous shock to the German labor market to elucidate the spatial nexus between crime and unemployment. Our contribution is twofold: first, we lay down a parsimonious spatial labor market model with search frictions, criminal opportunities, and, unlike earlier analyses, productivity shocks which link criminal engagement with employment status. Second, we seek empirical support using data on the 402 German regions and years 2009 - 2010, in a setting that not only allows for crime spatial multipliers but also circumvents reverse causality by exploiting exogenous changes in unemployment due to the crisis. As predicted by our theory, the destruction of the lowest productivity matches, measured by increases in unemployment rates, has a significant impact on pure property crime (housing burglary and theft of/from motor vehicles) and street crime. The analysis offers important implications for local government policy.

Keywords: Crime; Unemployment; Spatial Econometrics; Global Financial Crisis (search for similar items in EconPapers)
JEL-codes: C31 J64 K42 R10 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2017-02-02
New Economics Papers: this item is included in nep-eur, nep-geo, nep-law and nep-ure
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Working Paper: Spatial Nexus in Crime and Unemployment in Times of Crisis (2017)
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