The relationship between unemployment and crime:evidence from time-series data and prefectural panel data

This paper examines the effect of unemployment rates on crime rates, using two types of Japanese data: time-series data from 1976 to 2008 and prefectural panel data from 1975 to 2005. An analysis using time-series data shows that an increase in unemployment rates raises crime rates, while the number of police officers decreases them. It should be noted, however, that the effects are different among the various types of crime. An analysis using prefectural panel data shows similar results; however, the increase in poverty rates raises crime rates more than the increase in unemployment. Our empirical evidence also suggests that occurrences of crime are attributed to both labor market conditions related to the opportunity cost of crime, and the number of policies related to crime deterrent, as the theory of crime suggests.