A non-stationary panel data investigation of the unemployment–crime relationship |
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| Institution: | 1. Department of Economics, Lund University, P.O. Box 7082, 220 07 Lund, Sweden;2. Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance, Australia;1. Research and Innovation Unit, The National School of Government, South Africa;2. Wittgenstein Centre for Demography and Global Human Capital (IIASA, VID/ÖAW, WU, Austria), Vienna Institute of Demography and International Institute for Applied Systems Analysis, Austria;3. Wittgenstein Centre for Demography and Global Human Capital (IIASA, VID/ÖAW, WU, Austria), Vienna Institute of Demography and Vienna University of Economics and Business, Austria;4. University of Johannesburg, South Africa;1. Melbourne Business School, University of Melbourne, 200 Leicester Street, Carlton, Victoria 3053, Australia;2. Department of Economics, Columbia University, 420 West 118 Street, 1022 International Affairs Building, New York, NY, 10027, United States;3. School of Finance, Nankai University, China |
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| Abstract: | Many empirical studies of the economics of crime focus solely on the determinants thereof, and do not consider the dynamic and cross-sectional properties of their data. As a response to this, the current paper offers an in-depth analysis of this issue using data covering 21 Swedish counties from 1975 to 2010. The results suggest that the crimes considered are non-stationary, and that this cannot be attributed to county-specific disparities alone, but that there are also a small number of common stochastic trends to which groups of counties tend to revert. In an attempt to explain these common stochastic trends, we look for a long-run cointegrated relationship between unemployment and crime. Overall, the results do not support cointegration, and suggest that previous findings of a significant unemployment–crime relationship might be spurious. |
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| Keywords: | Crime Unemployment Panel data Unit roots Cointegration Cross-section dependence |
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