Unemployment and crime: Is there a connection?

A panel of Swedish counties over the years 1988-1999 is used to study the effects of unemployment on property crime rates. The period under study is characterized by turbulence in the labor market-the variation in unemployment rates was unprecedented in the latter part of the century. Hence, the data provide a unique opportunity to examine unemployment effects. According to the theory of economics of crime, increased unemployment rates lead to higher property crime rates. A fixed-effects model is estimated to investigate this hypothesis. The model includes time- and county-specific effects and a number of economic and socio-demographic variables to control for unobservables and covariates. The results show that unemployment had a positive and significant effect on some property crimes (burglary, car theft and bike theft).