Munich Personal RePEc Archive

Crime and economic conditions in the United States Revisited

Ogundari, Kolawole (2021): Crime and economic conditions in the United States Revisited.

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Conventional wisdom shows that crime exhibits a countercyclical pattern-trending up during recessions and down during economic expansion. This observation makes the analyzes of the determinants of the crime of interest to researchers to inform policy. To this end, the present study employs historical data to analyze the effects of economic conditions on crime rates in the U.S. The analysis is based on balanced panel data from all 50 states and the district of Columbia on violent and property crime rates covering from 1976-2019. We employed the linear and dynamic panel models, while four indicators of economic conditions were considered in this study. The empirical results show that these commonly used economic indicators significantly affect crime rates. Specifically, we found that unemployment rates and income inequality increased crime rates, while personal income and economic growth decreased crime rates. This shows that continued efforts to reduce unemployment and inequality coupled with policies to boost personal income and economic growth are vital to restrain future crime increases in the U.S. However, these findings are supported by the linear and dynamic model specifications employed in this study.

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