Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2003:13: Crime, Unemployment and Labor Market Programs in Turbulent Times

Anna Nilsson () and Jonas Agell ()
Additional contact information
Anna Nilsson: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Jonas Agell: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: We exploit the exceptional variation in municipality-level unemployment and spending on labor market programs in Sweden during the 1990s to identify the impact of unemployment and programs on crime. We identify a statistically significant effect of unemployment on the incidence of overall crime, burglary, auto-theft and drug possession. A calculation suggests that the sharp reduction in unemployment during the later 1990s may have reduced burglary and auto-theft with 15 and 20 percent, respectively. After addressing several specification issues, we conclude that there is at best weak evidence that labor market programs ­ general ones and those specifically targeted to the young ­ help to reduce crime.

Keywords: crime; unemployment; labor market programs; panel data

JEL-codes: J00; K40

36 pages, October 14, 2003

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