Do Economic Conditions Still Cause Crime? Some Comforting Empirical Evidences from EU Panel

Abstract

Higher crime rates lead to the increasing fear and anxiety in society and disturb the social structure and harmony in the country. In the last decades, many scientists depict a decrease in economic factors, such as GDP per capita, unemployment rate, poverty, etc. as the primary drivers of crime both in developed and in developing countries. Even during the periods of economic crises, crime rates in the European Union (EU) continued to either decline or remain the same, thus bringing into question the impact of economic factors on crime rates in the EU. The paper examines the impact of changing economic conditions on crime rates in EU countries, employing nowadays vastly used methods in economics to address endogeneity. The aim of the paper is to empirically estimate the relationship between crime rates and economic factors, using previously developed methods. After a series of robustness checks, estimations did not provide evidence of a significant relationship between economic conditions and crime rates over the last decade in EU countries, except for homicides in some model specifications.

Keywords

• crime rates
• crime prevention
• economic conditions
• panel data
• gmm estimator