Researchers measure the relationship between unemployment and crime

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Mass layoffs in times of crisis can increase crime rates, according to a study by Diogo Brito and Paolo Pinotti (both at Bocconi Baffi-CAREFIN’s CLEAN Center) and Breno Sampaio (Federal University of Pernambuco) published in economics. Thus, active labor market policies aimed at accelerating the return of workers to jobs are urgently needed.

Exploiting individual-level data on the world of male workers and criminal cases in Brazil over the period 2009-2017, the authors note that job loss due to mass layoffs leads to a 23% increase in the likelihood of criminal prosecution.

The likelihood of prosecution rises immediately in job loss and remains constant for subsequent years, unless Worker Covered by the National Unemployment Insurance, which awards 80% of the salary for three to five months after displacement. Even then, though, the mitigating effect wears off when the insurance expires.

The observed effect reflects an increase in economically motivated crime (+43%) and violent crimes (+17%) and is significantly stronger for the groups whose liquidity is likely to be constrained by job losses, i.e. younger workers and those with lower employment and lower educational attainment. However, the likelihood of committing crimes increases dramatically for all groups – including workers with above-average incomes, albeit to a lesser degree. An indirect effect of parental function loss on children’s behavior has also been observed. In particular, the probability of committing a a crime On average, 18% for cohabiting sons of displaced workers.

While the theory has already put forward a link between unemployment and crime, demo guide It has always been rare due to the lack of individual data. However, the rich data set used by the authors allowed them to compare the behavior of workers displaced by mass layoffs with workers with similar characteristics, who were not displaced.

The authors were also able to shed light on the mechanisms that lead to the transition from unemployment to crime. “Our results support the economic explanations, primarily the liquidity constraints of the alternative hypotheses,” said Dr. Brito. Moreover, the increase in all types of crimes, including crimes that have no economic motive, such as motor vehicle traffic offenses, indicates that psychological stress When a job is lost it also plays an important role.”

Prof. Pinotti concluded that “In the unemployment crisis, income support must be accompanied by active labor market policies aimed at accelerating the return of workers to jobs and ensuring stable income rather than temporary income assistance. Moreover, passive and active policies. They must target vulnerable groupsbecause such groups are at greater risk of poverty upon demobilization, and are therefore more likely to commit crimes.”

Layoffs lead to higher rates of violent crime and property crime

more information:
Diogo JC Brito et al., The Impact of Job Loss and Unemployment Insurance on Crime in Brazil, economics (2022). DOI: 10.3982 / ECTA18984

Presented by Bocconi University

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