Crime and Unemployment

A Study of Social and Economic Factors that Influence the rise and fall of Criminal Behavior in the United States. By: Elizabeth Bruce Natasha Espinosa Derrick Phillips Contents Introduction3 Hypotheses5 Methodology5 Data & Data Collection6 Analysis8 Summary & Conclusion9 ? Introduction Crime and its causes, have been studied the world over. In particular, there have been noted studies on the cost and benefit of crime, state of the economy and crime, and unemployment and wages and crime (Jones and Kutan). Some researchers have found relationships between unemployment and crime, while others have not.

However, a more controversial issue is the explicit relationship between unemployment and crime. In other words, does unemployment cause crime or are there other causes (Papps and Winkelmann)? Specifically, does the average median income of a household, the individual poverty level, high school graduation rate, population, or the rate of divorce have influences on crime in the US? It has been observed that during the 1980s, the unemployment rate rose, as so did the crime rate, while in the 1990’s both declined (Gould, Mustard and Weinberg).

If a contributory relationship is established, then development of incentives to avoid layoffs, sponsor work programs, and create unemployment relief programs should help to deter crime. The more job opportunities that are available to the able workforce, the less crime will be experienced in the community. Similarly, if a causal relationship is found between crime and other social and economic factors like divorce rate, median income, graduation rate, and poverty level, then ways to positively influence these factors should be developed and enacted in order to further deter crime in society.

In Ehrlich’s model, individuals divide their time between legal activities and risky illegal activities. If legal income opportunities become scarce relative to potential gains from crime, the model predicts that crime will become more frequent. Increased unemployment, decreased graduation rate, increased divorce rate, and low income could be such factors. In studying past data as well as past research studies, there were some similarities in the findings, however in the analysis of the data there were also some contradictions.

A simple theory from past studies showed that a decline in the wage offered is directly linked to an increase in the relative payoff of criminal activity; thus inducing workers to transition away from the legal sector towards the illegal sector. In addition, a lower wage offered may produce an income effect by increasing the need to seek additional sources of income in less desirable and more dangerous ways. The degree of legal alternatives affect criminal behavior, however, this varies by the type of crime.

Some crimes such as robbery, larceny, burglary, and auto theft can be used for self enrichment; whereas, other crimes such as murder, rape, and assault are much less likely to bring about material gain to the offender. Offenders of the latter crimes are much more likely to be motivated by non-pecuniary considerations. It is important to note that only the most severe crimes are reported and when multiple crimes are committed in the same incident.

With all variables held constant, it was still proven that a reduction in legal opportunities was directly influential in making one more likely to engage in any form of criminal activity regardless of motives, possibly due to the reduced legal earnings lost while engaging in a criminal career and potentially serving jail time. This overall trend represents a large long-term decline in the earning prospects of less educated males; although less educated workers suffered the most unemployment, unemployment rates generally follow a cyclical pattern that, by definition eventually traces out the business cycle.

It is clear that the unemployment rate affects the labor market prospects of less educated men, but it is hard to discern long term deterioration in their legal opportunities by looking at the overall trend in the unemployment rate. The overall decline in the labor market prospects of less educated men is clearly shown by their wages. The data plainly shows that the propensity to commit crime moved inversely to the trends in the labor market conditions for unskilled men. These trends seems to be related, particularly since young unskilled men are the most likely to commit crime.

The objective of this paper is to visit the issue of whether unemployment, graduation rate, divorce rate, poverty rate, population, and median income have causal effects on various categories of economic and anti-social crime. For this purpose, we analyze crime data from 44 US States and the District of Columbia. We estimate the relationship between several crime categories and the independent variables. The most important independent variables are: median income, unemployment rate, divorce rate, poverty rate, population, and graduation rate.

The study of how graduation rate is related to crime is interesting because it could also be a factor in unemployment and median income. This could be due to fewer job opportunities as most skilled trades require at least a diploma. Unskilled laborers also tend to make less money and are more expendable and easily replaced. Similarly, unemployment could be a factor in poverty, while graduation and poverty could have a mutual influence on each other. Therefore, it is important to use all the social and economic factors outlined in the text to test the hypotheses discussed in the following section. Hypotheses

In order to determine social and economic affects on crime we must test three main hypotheses. The first hypothesis states that a higher growth in employment leads to lower growth in the number of property crimes because it offers less incentive to potential criminals. The second hypothesis states that as household median income increases, more property crimes are committed because more goods are available in the community. The third hypothesis states that as the graduation rate decreases, incidences of violent crime increases, due to more outdoor activities, less job opportunities, and gang influences.

The three hypotheses will be tested by using a regression analysis, which will be performed at a 95% confidence interval to determine if the hypothesis can be supported of not. A test for multicollinearity will also be performed. Methodology Regression analysis was used in testing the hypotheses outlined in this document. The reasoning for the use of regression analysis as the testing methodology is that attempts were made to draw a straight line relationship between the independent variables and dependent variables; that is, the desire was to show a linear relationship between two variables.

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