Does Unemployment Increase Crime?: Evidence from U.S. Data 1974–2000

Ming-Jen Lin
Authors registered in the RePEc Author Service: 明仁 林

Journal of Human Resources, 2008, vol. 43, issue 2, 413-436

Abstract: OLS may understate the effect of unemployment on crime because of the endogeneity problem (Raphael and Winter-Ember 2001). In this paper, we use changes in the real exchange rate, state manufacturing sector percentages, and state union membership rates as novel instrumental variables to carry out 2SLS estimations. We find a one-percentage-point increase in unemployment would increase property crime by 1.8 percent under the OLS method, but that the elasticity goes up to 4 percent under 2SLS. The larger 2SLS effect has significant policy implications because it explains 30 percent of the property crime change during the 1990s.

Date: 2008
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Citations: View citations in EconPapers (117)

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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:43:y:2008:i:2:p:413-436

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