Working Paper Series,
Uppsala University, Department of Economics

Abstract: This paper uses a panel of Swedish counties over the years 1988-99 to study the effects of unemployment on property crime rates. The period under study is characterized by great turbulence in the labor market - the variation in the unemployment rates is unprecedented in the second half of the century. The data hence provides a unique opportunity to investigate unemployment effects. According to the theory of economics of crime, increased unemployment rates lead to higher property crime rates. A fixed effects model is estimated to investigate this hypothesis. The model includes time- and county-specific effects and a number of economic and socio-demographic variables in order to control for unobservables and covariates. In addition the model is estimated with linear and quadratic time trends to control for county-specific unobserved trends. The result gives strong evidence that unemployment has a positive and significant effect on burglary, car theft and bike theft.

Keywords: Economics of Crime; Unemployment; Panel Data; Fixed Effects Estimation

JEL-codes: C23; J29; J39; J69

27 pages, March 25, 2003

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