Does Unemployment Increases Crime? Evidence from County Data of Taiwan 1978-2003
Resource
經濟論文叢刊, 34(4), 445-482
Journal
經濟論文叢刊
Journal Volume
34
Journal Issue
4
Pages
445-482
Date Issued
2006-12
Date
2006-12
Author(s)
Lin, M.J.
Liu, C.W.
Abstract
Unemployment has a small positive effect only on property crime (Levitt, 2004). However, most research has not considered the problem of simultaneity (Piehl, 1998). In this paper, we first describe how economic theory predicts the effect of unemployment on crime. Exchange rates for the US dollar and Japanese Yen against the New Taiwanese dollar, along with oil price are then used as novel instrumental variables to perform a 2SLS. Under OLS, the effect of unemployment is positive and significant on both violent and property crime. Under 2SLS, unemployment has positive significant effect only on property (theft) but not violent crime. Furthermore, the estimates are larger under 2SLS than OLS. Our results also show robustness in the Weak Ⅳ test at the first stage and an over-identification test at the second stage.
Subjects
失業
犯罪率
工具變數
unemployment
crime rates
instrumental variables
Type
journal article