Crime,inequality and unemployment in England and Wales

A model of crime is developed based on principles from the existing literature with some original insight. The implications of the model are that income inequality and unemployment are important explanatory variables for crimes motivated by economic gain, but do not offer much explanatory power for other types of crime. Panel data of UK regions over the years from 2002 to 2007 are then used to test these predictions. The empirical results strongly support the hypothesis that crime is an economic phenomenon.     

What causes violent crime?

This study uses panel data of intentional homicide and robbery rates for a sample of developed and developing countries for the period 1970-1994, based on information from the United Nations World Crime Surveys, to analyze the determinants of national crime rates both across countries and over time. A simple model of the incentives to commit crimes is proposed, which explicitly considers possible causes of the persistence of crime over time (criminal inertia). A panel-data based GMM methodology is used to estimate a dynamic model of national crime rates. This estimator controls for unobserved country-specific effects, the joint endogeneity of some of the explanatory variables, and the existence of some types of measurement errors afflicting the crime data. The results show that increases in income inequality raise crime rates, crime tends to be counter-cyclical, and criminal inertia is significant.     

Does private security affect crime?: a test using state regulations as instruments

Private security is employed to deter criminals from attacking specific targets, presumably not to produce general deterrence. Indeed, private security generates negative spillovers as criminals substitute non-protected targets for protected targets. Specific deterrence efforts may generate positive spillovers too, however, by raising the expected cost of committing crimes, thereby reducing crime in an area. The hypothesis that private security deters crime at the state level is tested. The demand for private security in an area is expected to be simultaneously dependent on the level of crime; so, an instrumental variables approach is employed in a panel-data fixed-effect model using state-level data from 1998 to 2010. Instruments for the amount of private security are state-wide licensing regulations for firms specializing in providing security, since these regulations should influence entry. Some state-level measures of violent and property crime are shown to be negatively and significantly related to increases in private security, suggesting that private security generates a general deterrence effect.     

Is there also a North–South Divide in the Diffusion of Crime? A Cluster Analysis of Italian Provinces

The presence of crime is often considered as one of the most important social variables to be negatively associated with economic development. As is well known, Italy exhibits an economic divide between its central‐northern and southern regions. This paper tries to ascertain whether there is also a divide in the diffusion of crime. To this purpose, Italian provinces are classified into groups by using a new methodology that combines cluster analysis with time series cross‐section data. The statistical searches for groups are carried out by using an unbalanced time series cross‐section data‐set made up of yearly observations. The results of the analysis show that crime is not inextricably tied to certain geographical locations, and not others, as is usually believed.     

Housing prices and crime perception

In this article, we combine data from the housing market with data from a victimization survey to estimate the effect of crime perception on housing prices in the City of Barcelona from 2004 to 2006. Using dwelling data and a hedonic price model (using both OLS and quantile regressions), in the first stage, we estimate the shadow price of the location of dwellings. In the second stage, we analyse the impact of crime perception, after controlling for other district characteristics such as local public spending and immigration, on this locational valuation. After accounting for the possible endogeneity of crime and housing prices, our findings suggest that crime exerts relevant costs beyond its direct costs. Indeed, a one standard deviation increase in perceived security is associated with a 0.57 % increase in the valuation of districts. Moreover, in districts perceived as being less safe than the average for the City of Barcelona, houses are highly discounted. Less safe districts have on average a valuation that is 1.27 % lower.     

The Moral Imperative and Social Rationality of Government-Guaranteed Employment and Reskilling

Unemployment exacts a high cost to its victims, not only in lost income, but also in terms of quality of life (insecurity, depression, abandoned families, divorce, suicide and poorer health). It also exacts a high cost to society in terms of lost output, foregone tax revenue, depreciating human capital, and increased costs of welfare, crime and health care. Yet modern wealthy societies have, principally for the sake of price stability and to avoid the budget costs of a full remedy, chosen to tolerate a substantial level of permanent unemployment. This article explores the moral conditions of this social choice and its rationality in terms of social welfare. It makes and develops support for two claims: society's tolerance of involuntary unemployment is morally wrong, and it is socially and economically irrational. It concludes that government should guarantee employment by serving as employer of last resort and where appropriate provide for retraining.     

ASSESSING THE IMPACTS OF LABOR MARKET AND DETERRENCE VARIABLES ON CRIME RATES IN MEXICO

Many studies examine the relationship between crime rates and various economic and/or sociodemographic variables in high income countries, but similar efforts for middle and low income countries are less common. Utilizing an 8‐year panel data sample for all 32 states in Mexico, this study assesses the impact of Mexican labor market and deterrence variables on various Mexican crime rates. The principal results indicate that: (1) State gross domestic product (GDP) per capita has ambiguous effect on crime rates under different conditions. Both wages and unemployment rates are negatively linked with crime rates. (2) Although the Mexican judicial and public security systems are widely believed to be ineffective, increased federal police forces and incarceration rates are associated with lower crime rates, but higher public security expenditure per capita is associated with higher crime rates. (3) The impacts from labor market and deterrence variables presented in (1) and (2) continue to hold under the Fox administration as well as for non‐border states. Their respective impacts diminish, however, under the Calderon administration as well as for border states because of the small number of observations. Overall, the results indicate that increasing average wages, federal police forces, and incarceration rates would have significant impacts on reducing crime rates in Mexican states. (JEL O54, K42)     

Modelling crime and punishment

This paper provides an extended supply of labour model which allows for different intensities of legal and illegal (criminal) activities and in which criminal activities may be considered both as work and leisure. Heterogeneity of individuals is also taken into account. The model is estimated from Finnish aggregate time-series data, pooled Finnish municipalities data and pooled international cross-country data. With the Finnish aggregate data, a volume index of crime is constructed and then used in testing the model. All empirical results give strong support to the hypothesis that apprehension and punishment are important deterrents of crime. By contrast, the role of sosioeconomic and demographic variables turns out to be of little importance.     

Fixed Costs, Foreign Direct Investment, and Gravity with Zeros

Fixed costs play a crucial role in current models of foreign direct investment (FDI), yet they are almost entirely ignored in empirical treatments of FDI. We fill this gap by using a 1989–2001 panel of FDI flows into Iceland to examine the determinants of fixed costs for multinational firms and how these influence aggregate patterns of investment. Our additions to research in the field include usage of several natural-resource variables, and the analysis of data on initial entry of FDI into a developed country. We use the Heckman two-step procedure, which allows us to account for fixed costs and their impact on estimation. Taken together, we find that the standard OLS approach to the data incorrectly links the quantity of FDI to source-country variables while in fact most of their role is in determining whether FDI takes place at all.     

EDUCATION,WORK, AND CRIME: A HUMAN CAPITAL APPROACH*

This article develops a model of crime in which human capital increases the opportunity cost of crime from foregone work and expected costs associated with incarceration. Older, more intelligent, and more educated adults should commit fewer street (unskilled) crimes. White collar crimes decline less (or increase) with age and education. Predictions for age–crime and education–crime relationships receive broad empirical support in self‐report data from the National Longitudinal Survey of Youth and arrest data from the Uniform Crime Reports. The effects of education, training, and wage subsidies, as well as enforcement policies on criminal behavior are discussed.     

The influence of Flexible Manufacturing Technology adoption on productivity of Malaysian manufacturing industry

This paper investigates the influence of the adoption of Flexible Manufacturing Technology (FMT) on the Total factor Productivity Growth (TFPG) of Malaysia Manufacturing Industry. The Principal Component Analysis has been adopted to extract the most appropriate underlying dimensions of FMT to use in place of the eight FMT variables owing to the potential multicollinearity. The study has been conducted within FMT intensively adopted 16 three-digit industries that encompass 50 five-digit industries covering the years 2000–2005. The results obtained from the two situations, one, including the industry fixed effects dummy variables and the other without these, are contrasted. It is established that the model that included the industry fixed effect dummy variables has a greater explanatory power. The two principal components that account for the greater variation in FMT show positive and moderately significant relationship with TFPG. The study provides sufficient evidence to conclude that FMT has a direct and moderately significant relationship with TFPG.     

Economic cost–benefit analysis of the addictive digital game industry

This study attempts to estimate the economic costs and benefits of the addictive digital game industry. Addiction to digital games induces economic costs such as increase in crime, facilities investments for curbing addiction, increase in counselling costs and other welfare losses. As a case study, we investigate the digital game industry in South Korea which is known to have one of the highest rates of game addiction. According to our calculations, the annual cost of game addiction is estimated to be approximately $3.5B while the annual benefit is approximately $24.3B ($3.7B for addicted user market). The proportion of the total costs to total benefits from the game industry is an alarming 14% (95% for addicted user market). We offer some policy recommendations.     

SOCIAL ACCOUNTS AND THE DISTRIBUTION OF INCOME: THE MALAYSIAN ECONOMY IN 1970

Although the functional and institutional distributions of income are integrally connected to individual living standards and other development policy objectives, these dimensions are rarely given prominence or even accommodated within standard national accounting frameworks. This paper summarizes research on the estimation of a social accounting matrix (SAM) for Malaysia for 1970 in which the distribution of income between different factors and socio-economic groups is identified. It is the latest of a series of case studies involving some of the authors and is, perhaps, the most detailed of its kind. The study departs from the United Nations SNA guidelines at various points. The SNA basically proposes a commodity balance approach to national income accounting. In giving equal emphasis to income/outlay accounts as to the production accounts, the present study has brought together data from two major primary sources: a household expenditure survey and a production survey. Their combination poses several problems which are discussed in the paper. It leads to an integrated picture, in matrix form, of the interrelationships between income distribution and production structure in the Malaysian economy. Both the factor and household accounts in our SAM are disaggregated according to race and the geographic distinction between Peninsular and East Malaysia, with an urban/rural split within Peninsula Malaysia. The Peninsula labor force is further disaggregated by education level, while its households are then subdivided according to the employment status of main income earners. Arguments for and against these choices are presented. Some other aspects of the study can be noted. First, the distinction drawn between East and Peninsular Malaysia is desirable not only because of the inherent interest of the regions but also because of large differences in data availability and hence in estimation methods. Secondly, to complete our SAM it was necessary to estimate inter-household transfers, being the institutional analogue of inter-industry commodity flow. And finally an attempt has been made to impute the labor component of unincorporated business income. These, then, are the major problems which had to be overcome in our attempt to quantify the generation, distribution, and redistribution of income within Malaysia in a SAM framework.     

Determinants of violent and property crimes in England and Wales: a panel data analysis

We examine various determinants of property and violent crimes by using police force area level (PFA) data on England and Wales over the period of 1992–2008. Our list of potential determinants includes two law enforcement variables namely crime-specific detection rate and prison population, and various socio-economic variables such as unemployment rate, real earnings, proportion of young people and the Gini Coefficient. By adopting a fixed effect dynamic GMM estimation methodology we attempt to address the potential bias that arises from the presence of time-invariant unobserved characteristics of a PFA and the endogeneity of several regressors. There is a significant positive effect of own-lagged crime rate. The own-lagged effect is stronger for property crime, on an average, than violent crime. We find that, on an average, higher detection rate and prison population leads to lower property and violent crimes. This is robust to various specifications. However, socio-economic variables with the exception of real earnings play a limited role in explaining different crime types.     

Criminal behaviour and youth in the labour market: the case of the pernicious minimum wage

This paper empirically tests the relationship between variations in Uniform Crime Reports (UCR) index crime rates for teenagers 16–19 years of age with changes in the real minimum wage adjusted for industry coverage in the United States for the period 1960–1987. The analysis reveals that there exists a positive relationship between changes in the real minimum wage and teenage criminal homicide, forcible rape, and motor vehicle theft crime rates. These findings are consistent with the empirical evidence concerning the impacts of the minimum wage on youth labour market opportunities and also with the theoretical ad empirical evidence regarding the incidence of criminal activity made as an occupational choice decision formulated under risk and uncertainty. However, the results indicate no impact of the minimum wage on the other teenage UCR index crime rates as found by Hashimoto (1987). The evidence also suggests that variations in real criminal justice expenditures per capita reduce teenage propety crime rates over time. Thus, there exists weak empirical evidence suggesting that policymakers should not only concern themselves with the traditionally known impacts of the minimum wage on youth labour market activities but also with the added social costs these impacts have on the incidence of youth criminal behavior. Matters of data exigencies and issues pertaining to the direction of future research are also discussed.     

Trading with Tigers: A Technical Analysis of Southeast Asian Stock Index Futures

ABSTRACT

Our paper examines the profitability of technical trading rules in Southeast Asian (SEA) ‘tiger cub’ stock index futures markets during and after the global financial crisis (GFC) of 2007/2008. Using daily closing price data from 2007 to 2012, we explore technical trading rules such as exponential moving averages (EMA (20), EMA (100), EMA (20,100)) and moving average convergence divergence (MACD) in Indonesia, Malaysia, the Philippines and Thailand. The findings reveal that after applying trading rules that account for transaction costs and risk, abnormal profits cannot be achieved above a naı¨ve ‘buy-and-hold’ strategy (with the exception of EMA (100) and EMA (20,100) in Indonesia, and EMA (20,100) in both the Philippines and Thailand). There appears to be some degree of success with the application of longer-term trading rules; however, unless transaction costs can be reduced, investors are best advised to pursue passive investment approaches. Despite the economic uncertainty associated with the GFC and ongoing market volatility, it appears that SEA tiger cub stock index futures markets are weak-form efficient.     

Racial stereotypes and robbery

Robbery is a serious, widespread and sometimes violent crime resulting each year in costs to victims of several billion dollars. Data on the incidence of robbery reveals certain striking racial disparities. African-Americans are more likely to be victims, arrestees and prisoners than are members of other demographic groups, and while black-on-white robberies are very common, white-on-black robberies are extremely rare. The disparities for robbery are also much greater than those for other crimes of acquisition. We develop a model of robbery that attempts to address these and other stylized facts. Robberies are typically interactions between strangers that involve a sequence of rapid decisions with severely limited information. Potential offenders must assess the likelihood of victim resistance, and victims must assess the likelihood that resistance will be met with violence. Racial disparities in the distribution of income can cause such probability assessments to be race-contingent, affecting crime rates as well as rates of resistance and violence. We argue that this model helps account for several empirical regularities that appear puzzling from the perspective of alternative theories of crime.     

The Differential Returns Offered by Mutually Owned and Proprietary UK Depository Institutions: 1993–2000

The study quantifies the differences in the level of return from investing in deposit (savings) accounts provided by depository institutions, which are either 'mutual' or 'proprietary'. It is shown that for most types of deposit accounts offered in the UK, mutual building societies provide higher returns than proprietary firms. Surprisingly, it is also shown that returns from deposit accounts issued by converted or non‐mutual building societies are, generally, lower than either mutual building societies or proprietary firms. These findings are consistent for interest rate data adjusted for the effect of non‐price product characteristics and for unadjusted interest rate data.     

Cointegration analysis of quarterly tourism demand by Hong Kong and Singapore for Australia

Hong Kong and Singapore are two of the most important and fastest growing markets for tourists to Australia. The purpose of this paper is to investigate movements in the long-run demand for tourist travel by these two origin countries for Australia. Some of the leading macroeconomic variables examined to explain tourism demand are incomes in Hong Kong and Singapore, tourism prices in Australia, and transportation costs and exchange rates between the two countries and Australia. Seasonally unadjusted quarterly data are used for Hong Kong for the period 1975(1)–1996(4), and for 1980(4)–1996(4) for Singapore. Several proxy variables are used for the incomes of tourists from Hong Kong and Singapore to explain quarterly tourist arrivals to Australia. The augmented Dickey-Fuller test for unit roots is examined in the univariate framework, and Johansen's maximum likelihood procedure is used to test for cointegration and to estimate the number of cointegrating vectors. Error correction models are estimated to explain quarterly tourism demand by Hong Kong and Singapore for Australia.     

Determinants of foreign direct investment

Empirical studies of bilateral foreign direct investment (FDI) activity show substantial differences in specifications with little agreement on the set of included covariates. We use Bayesian statistical techniques that allow one to select from a large set of candidates those variables most likely to be determinants of FDI activity. The variables with consistently high inclusion probabilities include traditional gravity variables, cultural distance factors, relative labour endowments and trade agreements. There is little support for multilateral trade openness, most host‐country business costs, host‐country infrastructure and host‐country institutions. Our results suggest that many covariates found significant by previous studies are not robust.