Oil Hikes, Drugs and Bribes: Do Oil Prices Matter for Crime Rate in Russia?

Dmitry Burakov
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Dmitry Burakov: Department of Financial Markets and Banks, Financial University under the Government of Russian Federation, Moscow, Russia.

International Journal of Energy Economics and Policy, 2019, vol. 9, issue 1, 84-94

Abstract: In this article we test the hypothesis about the impact of oil prices shocks on the unemployment and crime rate on the example of oil-exporting country. According to the hypothesis, there exist a dependence of the labor market on oil revenue. A negative oil price shock should lead to a decrease in the employment rate, which in turn should lead to a rise in illegal forms of behavior. Illegal behavior is measured as an average of registered crimes (bribery and drug dealing). Based on data for 1990-2017 we study a case of Russia, using vector error correction model for detecting short- and long-term effects. Results show that oil prices and unemployment affect crime rate in the long-run in a case of oil-exporting country. Yet, in the short-run both negative oil shocks and a rise in unemployment rate lead to a statistically significant increase in bribery and drug dealing. A 1% decrease in oil price will lead to a 1,14% rise in bribery and drug dealing and a 1% increase in the unemployment rate leads to a 2,72% increase in drug dealing and bribery.

Keywords: oil prices; unemployment; crime rate; bribery; vector error correction approach. (search for similar items in EconPapers)
JEL-codes: E24 F43 K42 Q41 (search for similar items in EconPapers)
Date: 2019
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