RT Journal Article
SR Electronic
T1 Does Unemployment Increase Crime?
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 413
OP 436
DO 10.3368/jhr.43.2.413
VO 43
IS 2
A1 Lin, Ming-Jen
YR 2008
UL http://jhr.uwpress.org/content/43/2/413.abstract
AB OLS may understate the effect of unemployment on crime because of the endogeneity problem (Raphael and Winter-Ember 2001). In this paper, we use changes in the real exchange rate, state manufacturing sector percentages, and state union membership rates as novel instrumental variables to carry out 2SLS estimations. We find a one-percentage-point increase in unemployment would increase property crime by 1.8 percent under the OLS method, but that the elasticity goes up to 4 percent under 2SLS. The larger 2SLS effect has significant policy implications because it explains 30 percent of the property crime change during the 1990s.