Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2003:14: Crime, unemployment and labor market programs in turbulent times

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

31 pages, October 14, 2003

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