Investigating the drugs-crime channel in economics of crime models empirical evidence from panel data of the German states

The rising trends both in drug addiction and crime rates are of major public concern in Germany. Surprisingly, the economic theory of crime seems to ignore the drugs/crime nexus, whereas the criminological lit- erature considers illicit drug use a main reason of criminal activities. This paper provides an econometric assessment of the drugs/crime channel within a Becker/Ehrlich model of crime supply. Estimation with panel data from the German states allows us to take into account further factors that might influence both drug abuse and crime. The results indicate that drug offences have a significant impact, in particular on property crimes. We attribute this to a strong economic/related channel of drug abuse on crime.