European Journal of Law and Economics

, Volume 36, Issue 1, pp 183–207 | Cite as

Does more crime mean fewer jobs and less economic growth?

Article

Abstract

This paper employs an Autoregressive Distributed Lags approach to investigate how a set of economic variables and a deterrence variable affect criminal activity. Furthermore, it highlights the extent to which crime is detrimental to economic activity. The case study is Italy for the time span 1970 up to 2004. A Granger causality test is implemented to establish temporal interrelationships. The empirical evidence shows that the lack of deterrence positively affects each type of crime and especially thefts. All crime typologies have a negative effect on legal economic activity, reducing the employment rate. Furthermore, homicides, robbery, extortion and kidnapping have a crowding-out effect on economic growth.

Keywords

Crime Deterrence Economic variables Crowding-out effect 

JEL Classification

K14 C32 E24 

References

  1. Baharom, A. H., & Habibullah, M. S. (2009). Crime and income inequality: The case of Malaysia. Journal of Politics and Law, 2, 55–70.Google Scholar
  2. Becker, G. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76, 169–217.CrossRefGoogle Scholar
  3. Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37, 149–192.Google Scholar
  4. Buonanno, P. (2003). The socioeconomic determinants of crime. A review of the literature. Department of Economics, University of Milan-Bicocca, Working Paper Series 63.Google Scholar
  5. Cardenas, M., & Rozo, S. (2008). Does crime lower growth? Evidence from Columbia. The International Bank for Reconstruction and Development, The World Bank. Working paper 30.Google Scholar
  6. Chen, S. W. (2009). Investigating causality among unemployment, income and crime in Taiwan: Evidence from the bounds test approach. Journal of Chinese Economics and Business Studies, 7, 115–125.CrossRefGoogle Scholar
  7. Detotto, C., & Otranto, E. (2010). Does crime affect economic growth? Kyklos, 63, 330–345.CrossRefGoogle Scholar
  8. Detotto, C., & Otranto, E. (2012). Cycles in crime and economy: Leading, lagging and coincident behaviours. Journal of Quantitative Criminology, 28, 295–317.CrossRefGoogle Scholar
  9. Eckstein, Z., & Tsiddon, D. (2004). Macroeconomic consequences of terror: Theory and the case of Israel. Journal of Monetary Economics, 51, 1003–1006.CrossRefGoogle Scholar
  10. Enders, W., & Sanders, T. (1996). Terrorism and foreign direct investment in Spain and Greece. Kyklos, 49, 331–352.CrossRefGoogle Scholar
  11. Enders, W., Sandler, T., & Parise, G. F. (1992). An econometric analysis of the impact of terrorism on tourism. Kyklos, 45, 531–554.CrossRefGoogle Scholar
  12. Engle, R. F., & Granger, C. W. J. (1987). Co-integration and error correction: Representation, estimation, and testing. Econometrica, 55, 251–276.CrossRefGoogle Scholar
  13. Fleisher, B. M. (1963). The effect of unemployment on juvenile delinquency. The Journal of Political Economy, 71, 543–555.CrossRefGoogle Scholar
  14. Granger, C. W. J. (1988). Some recent developments in the concept of causality. Journal of Econometrics, 39, 199–211.CrossRefGoogle Scholar
  15. Greenberg, D. F. (2001). Time series analysis of crime rates. Journal of Quantitative Criminology, 17, 291–327.CrossRefGoogle Scholar
  16. Gregory, A. W., & Hansen, B. E. (1996). Residual-based tests for cointegration in models with regime shifts. Journal of Econometrics, 70, 99–126.CrossRefGoogle Scholar
  17. Habibullah, M. S., & Baharom, A. H. (2009). Crime and economic conditions in Malaysia. International Journal of Social Economics, 36, 1071–1081.CrossRefGoogle Scholar
  18. Johansen, S. (1988). Statistical analysis of cointegrating vectors. Journal of Economic Dynamics and Control, 12, 231–254.CrossRefGoogle Scholar
  19. Marselli, R., & Vannini, M. (1997). Estimating a crime equation in the presence of organized crime: Evidence from Italy. International Review of Law and Economics, 17, 89–113.CrossRefGoogle Scholar
  20. Masih, A. M. M., & Masih, R. (1996). Temporal causality and the dynamics of different categories of crime and their socioeconomic determinants: Evidence from Australia. Applied Economics, 28, 1093–1104.CrossRefGoogle Scholar
  21. Mauro, P. (1995). Corruption and growth. The Quarterly Journal of Economics, 110, 681–712.CrossRefGoogle Scholar
  22. Mauro, L., & Carmeci, G. (2007). A poverty trap of crime and unemployment. Review of Development Economics, 11, 450–462.CrossRefGoogle Scholar
  23. Mo, P. H. (2001). Corruption and economic growth. Journal of Comparative Economics, 29, 66–79.CrossRefGoogle Scholar
  24. Narayan, P. K., & Smyth, R. (2004). Crime rates, male youth unemployment and real income in Australia: Evidence from Granger causality tests. Applied Economics, 36, 2079–2095.CrossRefGoogle Scholar
  25. O’Brien, R. (1999). Measuring the convergence/divergence of serious crime arrest rates for males and females: 1960–1995. Journal of Quantitative Criminology, 15, 97–114.Google Scholar
  26. Pesaran, M. H., & Pesaran, B. (1997). Working with Microfit 4.0: Interactive econometric analysis. Oxford: Oxford University Press.Google Scholar
  27. Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289–326.CrossRefGoogle Scholar
  28. Podobnik, B. J., Shao, J., Njavro, D., Ivanov, P. C., & Stanley, H. E. (2008). Influence of corruption on economic growth rate and foreign investments. The European Physical Journal B, 63, 547–550.CrossRefGoogle Scholar
  29. Sandler, T., & Enders, W. (2008). Economic consequences of terrorism in developed and developing countries: An overview. In P. Keefer & N. Layza (Eds.), Terrorism, economic development and political openness. Cambridge: Cambridge University Press.Google Scholar
  30. Scorcu, A. E., & Cellini, R. (1998). Economic activity and crime in the long run: An empirical investigation on aggregate data from Italy, 1951–1994. International Review of Law and Economics, 18, 279–292.CrossRefGoogle Scholar
  31. Witt, R., & Witte, A. (2000). Crime, prison and female labour supply. Journal of Quantitative Criminology, 16, 69–85.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.Department of Economics and Business (DiSEA)University of Sassari and Centre for North South Economic Research (CRENoS)SassariItaly

Personalised recommendations