Examining the Link between Crime and Unemployment: A Time Series Analysis for Canada

We use national and regional Canadian data to analyze the relationship between the unemployment rate and crime rates. Given potential aggregation bias, we disaggregate the aggregate crime data and look at the relationship between six different types of crimes and unemployment rate. At the national level, neither the aggregate total crime, nor the aggregate property crime are significantly related with the unemployment rate; however a rise in unemployment rate does significantly increase certain kinds of property crime, like breaking and entering, and robbery. At the regional level, the results of our panel data analysis also show that breaking and entering, and fraud rise as contemporaneous unemployment increases. When we extend our panel analysis to control for police-civilian ratio and other controls (this reduces our sample period) we find a significant relationship between unemployment and all crime rates except violent crime. Our results thus indicate that for Canada the unemployment rate is a significant factor in predicting property crimes but not violent crimes.