The Crime Rate and the Condition of the Labor Market: A Vector Autoregressive Model

Few empirical studies of the economics of crime have doubted the deterrent effects of the legal sanctions on crime. Those studies, however, have not established a definitive understanding of the effects of labor market conditions on crime. In this paper, we examine the impact of labor market conditions, represented by either male civilian unemployment or labor force participation rates, on seven major categories of crime, using the quarterly crime-rate data for the United States. Based on an analysis of the reported crime rates for murder, forcible rape, robbery, aggravated assault, burglary, larceny-theft, and motor vehicle theft during the period from the first quarter of 1970 through the fourth quarter of 1983, we reject the null hypothesis that labor market conditions have no effects on the crime rate. Rather, we find that the male civilian unemployment rates, especially the rate for those twenty-five years old and over, are strongly and positively associated with most of the crime rates studied. The male civilian labor force participation rates are also found to be related to the crime rates considered here. Youth labor force participation rates for both whites and non-whites, sixteen to nineteen years old, are more strongly associated with the examined crime rates than are the labor force participation rates for males, twenty years old and over.