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Identifying the Effect of Unemployment on Crime

Steven Raphael and Rudolf Winter‐Ebmer
The Journal of Law & Economics
Vol. 44, No. 1 (April 2001), pp. 259-283
DOI: 10.1086/320275
Stable URL:
Page Count: 25
Subjects: Law Economics Business
Find more content in these subjects: Law Economics Business
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Identifying the Effect of Unemployment on Crime
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Abstract In this paper, we analyze the relationship between unemployment and crime. Using U.S. state data, we estimate the effect of unemployment on the rates of seven felony offenses. We control extensively for state‐level demographic and economic factors and estimate specifications that include state‐specific time trends, state effects, and year effects. In addition, we use prime defense contracts and a state‐specific measure of exposure to oil shocks as instruments for unemployment rates. We find significantly positive effects of unemployment on property crime rates that are stable across model specifications. Our estimates suggest that a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate. The evidence for violent crime is considerably weaker. However, a closer analysis of the violent crime of rape yields some evidence that the employment prospects of males are weakly related to state rape rates.

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