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Page 1: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS IN CANADA

Chew Lee Ping

BV 6925 Bachelor of Economics with HonoursCS29

(Industrial Economics)2012

2012

fusat Kbidmat Maklumat Akadcmik UNIVERSm MALAYSIA SARAWAK

PKHIDMAT MAKLUMAT AKADEMIK

11111 IIIllfiiiflllli 11111 1000245027

THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS IN CANADA

CHEW LEE PING

This project is submitted in partial fulfilment of the requirements for the degree of Bachelor of Economics with Honours

(Indyenstrial Economics)

Faculty of Economics and Business UNIVERSITI MALAYSIA SARAWAK

2012

I

I

Statement of Originality

The work describe in the Final Year Project entitled The Criminogenic Effects of Economic and Demographic Characteristics in

Canada is to the best of the authors knowledge that of the author except

where due reference is made

I

bull

Date Submitted Chew Lee Ping 23291

ABSTRACT

THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC

CHARACTERISTICS IN CANADA

BY

CHEW LEE PING

This study examines the relationships between crimes and their economic and

demographic determinants in Canada Cointegration and causality analyses have

been canied out in this study for the sample period of 1971 to 2009 The results of

cointegration analysis indicate that there is a cointegrated vector between the

variables used for total crime and homicide but no long-mn relationship existed

between motor vehicle theft and economic and demographic variables Granger

causality tests show that total crime and homicide are affected by unemployment

rate real gross domestic product (GDP) proportion of population aged 15-24 and

fertility rate in the long-run Besides that unemployment rate proportion of

population aged 15-24 and fe11ility rate Granger cause total crime whereas the

proportion of population aged 15-24 Granger causes fertility rate in the short-mn

There is no short-mn causality existed between motor vehicle theft and the economic

and demographic variables used in Canada

ABSTRAK

KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI

KANADA

Oleh

Chew Lee Ping

Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan

demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan

dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi

menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah

yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan

jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi

dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan

pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar

(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl

tI

jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang

berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala

perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka

pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan

pembolehubah ekonomi dan demografi yang digunakan di Kanada

ACKNOVLEDGEMENT

First of all I would like to express my special gratitude to my supervisor Dr

Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot

by giving useful advices and suggestions for me

I also like to give my deepest thanks to all the lecturers in Faculty of

Economics and Business (FEB) UNIMAS for sharing their valuable knowlege

throughout this study period

Last but not least I would like to thank my family members for their moral

support and financial support My grateful thanks also go to my friends and

coursemates who help and give me encouragement to complete my final year

project

VI

Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK

T ABLE OF CONTENTS

LIST OF FIGURES ix

LIST OF TAI3LES x

CHAPTER ONE INTRODUCTION

10 Introduction 1

11 Background of Study 4

12 Problem Statement 12

13 Objective of the Study 16

131 General Objective 16

132 Specific Objective 16

14 Significance of the Study 17

15 Scope of Study 18

CHAPTER TWO LITERATURE REVIEW

20 Introduction 19

21 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developed Countries 20

22 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developing Countries 31

23 Conclusion 39

CHAPTER THREE METHODOLOGY

30 Introduction41

Vll

r I

I

31 Model of Study 42

32 Data Collection 43

33 Data Analysis 44

331 Unit Root Test 44

332 JohansenmiddotmiddotJuselius Co integration Test 45

333 Granger Causality Test 46

CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION

40 Introduction 51

41 Unit Root Test Results 52

42 Johansen-Juselius Cointegration Test Results 53

43 Granger Causality Test Results 56

431 VEC Granger Causaility Test Results 56

432 VAR Granger Causality rest Results 57

CHAPTER FIVE CONCLUSION

50 Introduction 59

51 Concluding Remarks 59

52 Policy Implications 62

53 Limitation and Recommendation of Study 64

REFERENCES 67

viii

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 2: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

fusat Kbidmat Maklumat Akadcmik UNIVERSm MALAYSIA SARAWAK

PKHIDMAT MAKLUMAT AKADEMIK

11111 IIIllfiiiflllli 11111 1000245027

THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS IN CANADA

CHEW LEE PING

This project is submitted in partial fulfilment of the requirements for the degree of Bachelor of Economics with Honours

(Indyenstrial Economics)

Faculty of Economics and Business UNIVERSITI MALAYSIA SARAWAK

2012

I

I

Statement of Originality

The work describe in the Final Year Project entitled The Criminogenic Effects of Economic and Demographic Characteristics in

Canada is to the best of the authors knowledge that of the author except

where due reference is made

I

bull

Date Submitted Chew Lee Ping 23291

ABSTRACT

THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC

CHARACTERISTICS IN CANADA

BY

CHEW LEE PING

This study examines the relationships between crimes and their economic and

demographic determinants in Canada Cointegration and causality analyses have

been canied out in this study for the sample period of 1971 to 2009 The results of

cointegration analysis indicate that there is a cointegrated vector between the

variables used for total crime and homicide but no long-mn relationship existed

between motor vehicle theft and economic and demographic variables Granger

causality tests show that total crime and homicide are affected by unemployment

rate real gross domestic product (GDP) proportion of population aged 15-24 and

fertility rate in the long-run Besides that unemployment rate proportion of

population aged 15-24 and fe11ility rate Granger cause total crime whereas the

proportion of population aged 15-24 Granger causes fertility rate in the short-mn

There is no short-mn causality existed between motor vehicle theft and the economic

and demographic variables used in Canada

ABSTRAK

KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI

KANADA

Oleh

Chew Lee Ping

Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan

demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan

dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi

menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah

yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan

jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi

dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan

pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar

(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl

tI

jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang

berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala

perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka

pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan

pembolehubah ekonomi dan demografi yang digunakan di Kanada

ACKNOVLEDGEMENT

First of all I would like to express my special gratitude to my supervisor Dr

Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot

by giving useful advices and suggestions for me

I also like to give my deepest thanks to all the lecturers in Faculty of

Economics and Business (FEB) UNIMAS for sharing their valuable knowlege

throughout this study period

Last but not least I would like to thank my family members for their moral

support and financial support My grateful thanks also go to my friends and

coursemates who help and give me encouragement to complete my final year

project

VI

Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK

T ABLE OF CONTENTS

LIST OF FIGURES ix

LIST OF TAI3LES x

CHAPTER ONE INTRODUCTION

10 Introduction 1

11 Background of Study 4

12 Problem Statement 12

13 Objective of the Study 16

131 General Objective 16

132 Specific Objective 16

14 Significance of the Study 17

15 Scope of Study 18

CHAPTER TWO LITERATURE REVIEW

20 Introduction 19

21 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developed Countries 20

22 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developing Countries 31

23 Conclusion 39

CHAPTER THREE METHODOLOGY

30 Introduction41

Vll

r I

I

31 Model of Study 42

32 Data Collection 43

33 Data Analysis 44

331 Unit Root Test 44

332 JohansenmiddotmiddotJuselius Co integration Test 45

333 Granger Causality Test 46

CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION

40 Introduction 51

41 Unit Root Test Results 52

42 Johansen-Juselius Cointegration Test Results 53

43 Granger Causality Test Results 56

431 VEC Granger Causaility Test Results 56

432 VAR Granger Causality rest Results 57

CHAPTER FIVE CONCLUSION

50 Introduction 59

51 Concluding Remarks 59

52 Policy Implications 62

53 Limitation and Recommendation of Study 64

REFERENCES 67

viii

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 3: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

I

I

Statement of Originality

The work describe in the Final Year Project entitled The Criminogenic Effects of Economic and Demographic Characteristics in

Canada is to the best of the authors knowledge that of the author except

where due reference is made

I

bull

Date Submitted Chew Lee Ping 23291

ABSTRACT

THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC

CHARACTERISTICS IN CANADA

BY

CHEW LEE PING

This study examines the relationships between crimes and their economic and

demographic determinants in Canada Cointegration and causality analyses have

been canied out in this study for the sample period of 1971 to 2009 The results of

cointegration analysis indicate that there is a cointegrated vector between the

variables used for total crime and homicide but no long-mn relationship existed

between motor vehicle theft and economic and demographic variables Granger

causality tests show that total crime and homicide are affected by unemployment

rate real gross domestic product (GDP) proportion of population aged 15-24 and

fertility rate in the long-run Besides that unemployment rate proportion of

population aged 15-24 and fe11ility rate Granger cause total crime whereas the

proportion of population aged 15-24 Granger causes fertility rate in the short-mn

There is no short-mn causality existed between motor vehicle theft and the economic

and demographic variables used in Canada

ABSTRAK

KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI

KANADA

Oleh

Chew Lee Ping

Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan

demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan

dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi

menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah

yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan

jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi

dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan

pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar

(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl

tI

jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang

berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala

perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka

pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan

pembolehubah ekonomi dan demografi yang digunakan di Kanada

ACKNOVLEDGEMENT

First of all I would like to express my special gratitude to my supervisor Dr

Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot

by giving useful advices and suggestions for me

I also like to give my deepest thanks to all the lecturers in Faculty of

Economics and Business (FEB) UNIMAS for sharing their valuable knowlege

throughout this study period

Last but not least I would like to thank my family members for their moral

support and financial support My grateful thanks also go to my friends and

coursemates who help and give me encouragement to complete my final year

project

VI

Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK

T ABLE OF CONTENTS

LIST OF FIGURES ix

LIST OF TAI3LES x

CHAPTER ONE INTRODUCTION

10 Introduction 1

11 Background of Study 4

12 Problem Statement 12

13 Objective of the Study 16

131 General Objective 16

132 Specific Objective 16

14 Significance of the Study 17

15 Scope of Study 18

CHAPTER TWO LITERATURE REVIEW

20 Introduction 19

21 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developed Countries 20

22 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developing Countries 31

23 Conclusion 39

CHAPTER THREE METHODOLOGY

30 Introduction41

Vll

r I

I

31 Model of Study 42

32 Data Collection 43

33 Data Analysis 44

331 Unit Root Test 44

332 JohansenmiddotmiddotJuselius Co integration Test 45

333 Granger Causality Test 46

CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION

40 Introduction 51

41 Unit Root Test Results 52

42 Johansen-Juselius Cointegration Test Results 53

43 Granger Causality Test Results 56

431 VEC Granger Causaility Test Results 56

432 VAR Granger Causality rest Results 57

CHAPTER FIVE CONCLUSION

50 Introduction 59

51 Concluding Remarks 59

52 Policy Implications 62

53 Limitation and Recommendation of Study 64

REFERENCES 67

viii

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 4: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

ABSTRACT

THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC

CHARACTERISTICS IN CANADA

BY

CHEW LEE PING

This study examines the relationships between crimes and their economic and

demographic determinants in Canada Cointegration and causality analyses have

been canied out in this study for the sample period of 1971 to 2009 The results of

cointegration analysis indicate that there is a cointegrated vector between the

variables used for total crime and homicide but no long-mn relationship existed

between motor vehicle theft and economic and demographic variables Granger

causality tests show that total crime and homicide are affected by unemployment

rate real gross domestic product (GDP) proportion of population aged 15-24 and

fertility rate in the long-run Besides that unemployment rate proportion of

population aged 15-24 and fe11ility rate Granger cause total crime whereas the

proportion of population aged 15-24 Granger causes fertility rate in the short-mn

There is no short-mn causality existed between motor vehicle theft and the economic

and demographic variables used in Canada

ABSTRAK

KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI

KANADA

Oleh

Chew Lee Ping

Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan

demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan

dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi

menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah

yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan

jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi

dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan

pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar

(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl

tI

jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang

berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala

perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka

pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan

pembolehubah ekonomi dan demografi yang digunakan di Kanada

ACKNOVLEDGEMENT

First of all I would like to express my special gratitude to my supervisor Dr

Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot

by giving useful advices and suggestions for me

I also like to give my deepest thanks to all the lecturers in Faculty of

Economics and Business (FEB) UNIMAS for sharing their valuable knowlege

throughout this study period

Last but not least I would like to thank my family members for their moral

support and financial support My grateful thanks also go to my friends and

coursemates who help and give me encouragement to complete my final year

project

VI

Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK

T ABLE OF CONTENTS

LIST OF FIGURES ix

LIST OF TAI3LES x

CHAPTER ONE INTRODUCTION

10 Introduction 1

11 Background of Study 4

12 Problem Statement 12

13 Objective of the Study 16

131 General Objective 16

132 Specific Objective 16

14 Significance of the Study 17

15 Scope of Study 18

CHAPTER TWO LITERATURE REVIEW

20 Introduction 19

21 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developed Countries 20

22 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developing Countries 31

23 Conclusion 39

CHAPTER THREE METHODOLOGY

30 Introduction41

Vll

r I

I

31 Model of Study 42

32 Data Collection 43

33 Data Analysis 44

331 Unit Root Test 44

332 JohansenmiddotmiddotJuselius Co integration Test 45

333 Granger Causality Test 46

CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION

40 Introduction 51

41 Unit Root Test Results 52

42 Johansen-Juselius Cointegration Test Results 53

43 Granger Causality Test Results 56

431 VEC Granger Causaility Test Results 56

432 VAR Granger Causality rest Results 57

CHAPTER FIVE CONCLUSION

50 Introduction 59

51 Concluding Remarks 59

52 Policy Implications 62

53 Limitation and Recommendation of Study 64

REFERENCES 67

viii

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 5: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

ABSTRAK

KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI

KANADA

Oleh

Chew Lee Ping

Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan

demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan

dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi

menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah

yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan

jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi

dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan

pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar

(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl

tI

jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang

berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala

perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka

pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan

pembolehubah ekonomi dan demografi yang digunakan di Kanada

ACKNOVLEDGEMENT

First of all I would like to express my special gratitude to my supervisor Dr

Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot

by giving useful advices and suggestions for me

I also like to give my deepest thanks to all the lecturers in Faculty of

Economics and Business (FEB) UNIMAS for sharing their valuable knowlege

throughout this study period

Last but not least I would like to thank my family members for their moral

support and financial support My grateful thanks also go to my friends and

coursemates who help and give me encouragement to complete my final year

project

VI

Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK

T ABLE OF CONTENTS

LIST OF FIGURES ix

LIST OF TAI3LES x

CHAPTER ONE INTRODUCTION

10 Introduction 1

11 Background of Study 4

12 Problem Statement 12

13 Objective of the Study 16

131 General Objective 16

132 Specific Objective 16

14 Significance of the Study 17

15 Scope of Study 18

CHAPTER TWO LITERATURE REVIEW

20 Introduction 19

21 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developed Countries 20

22 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developing Countries 31

23 Conclusion 39

CHAPTER THREE METHODOLOGY

30 Introduction41

Vll

r I

I

31 Model of Study 42

32 Data Collection 43

33 Data Analysis 44

331 Unit Root Test 44

332 JohansenmiddotmiddotJuselius Co integration Test 45

333 Granger Causality Test 46

CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION

40 Introduction 51

41 Unit Root Test Results 52

42 Johansen-Juselius Cointegration Test Results 53

43 Granger Causality Test Results 56

431 VEC Granger Causaility Test Results 56

432 VAR Granger Causality rest Results 57

CHAPTER FIVE CONCLUSION

50 Introduction 59

51 Concluding Remarks 59

52 Policy Implications 62

53 Limitation and Recommendation of Study 64

REFERENCES 67

viii

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 6: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

ACKNOVLEDGEMENT

First of all I would like to express my special gratitude to my supervisor Dr

Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot

by giving useful advices and suggestions for me

I also like to give my deepest thanks to all the lecturers in Faculty of

Economics and Business (FEB) UNIMAS for sharing their valuable knowlege

throughout this study period

Last but not least I would like to thank my family members for their moral

support and financial support My grateful thanks also go to my friends and

coursemates who help and give me encouragement to complete my final year

project

VI

Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK

T ABLE OF CONTENTS

LIST OF FIGURES ix

LIST OF TAI3LES x

CHAPTER ONE INTRODUCTION

10 Introduction 1

11 Background of Study 4

12 Problem Statement 12

13 Objective of the Study 16

131 General Objective 16

132 Specific Objective 16

14 Significance of the Study 17

15 Scope of Study 18

CHAPTER TWO LITERATURE REVIEW

20 Introduction 19

21 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developed Countries 20

22 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developing Countries 31

23 Conclusion 39

CHAPTER THREE METHODOLOGY

30 Introduction41

Vll

r I

I

31 Model of Study 42

32 Data Collection 43

33 Data Analysis 44

331 Unit Root Test 44

332 JohansenmiddotmiddotJuselius Co integration Test 45

333 Granger Causality Test 46

CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION

40 Introduction 51

41 Unit Root Test Results 52

42 Johansen-Juselius Cointegration Test Results 53

43 Granger Causality Test Results 56

431 VEC Granger Causaility Test Results 56

432 VAR Granger Causality rest Results 57

CHAPTER FIVE CONCLUSION

50 Introduction 59

51 Concluding Remarks 59

52 Policy Implications 62

53 Limitation and Recommendation of Study 64

REFERENCES 67

viii

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 7: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK

T ABLE OF CONTENTS

LIST OF FIGURES ix

LIST OF TAI3LES x

CHAPTER ONE INTRODUCTION

10 Introduction 1

11 Background of Study 4

12 Problem Statement 12

13 Objective of the Study 16

131 General Objective 16

132 Specific Objective 16

14 Significance of the Study 17

15 Scope of Study 18

CHAPTER TWO LITERATURE REVIEW

20 Introduction 19

21 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developed Countries 20

22 Review of the Criminogenic Effects of Economic and Demographic

Characteristics in Developing Countries 31

23 Conclusion 39

CHAPTER THREE METHODOLOGY

30 Introduction41

Vll

r I

I

31 Model of Study 42

32 Data Collection 43

33 Data Analysis 44

331 Unit Root Test 44

332 JohansenmiddotmiddotJuselius Co integration Test 45

333 Granger Causality Test 46

CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION

40 Introduction 51

41 Unit Root Test Results 52

42 Johansen-Juselius Cointegration Test Results 53

43 Granger Causality Test Results 56

431 VEC Granger Causaility Test Results 56

432 VAR Granger Causality rest Results 57

CHAPTER FIVE CONCLUSION

50 Introduction 59

51 Concluding Remarks 59

52 Policy Implications 62

53 Limitation and Recommendation of Study 64

REFERENCES 67

viii

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 8: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

31 Model of Study 42

32 Data Collection 43

33 Data Analysis 44

331 Unit Root Test 44

332 JohansenmiddotmiddotJuselius Co integration Test 45

333 Granger Causality Test 46

CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION

40 Introduction 51

41 Unit Root Test Results 52

42 Johansen-Juselius Cointegration Test Results 53

43 Granger Causality Test Results 56

431 VEC Granger Causaility Test Results 56

432 VAR Granger Causality rest Results 57

CHAPTER FIVE CONCLUSION

50 Introduction 59

51 Concluding Remarks 59

52 Policy Implications 62

53 Limitation and Recommendation of Study 64

REFERENCES 67

viii

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 9: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

LIST OF TABLES

Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developed Countries 28

Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of

Economic and Demographic Characteristics in Developing Countries 37

Table 3 KPSS Test Results 52

Table 4 10hansen-luseIius Cointegration Test Results 53

Table 5 VEC Granger Causality Test Results 56

Table 6 VAR Granger Causality Test Results 57

IX

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 10: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

LIST OF FIGURES

Figure 1 Total Crime in Canada 1971-2009 4

Figure 2 Total Homicides in Canada 1971-2009 5

Figure 3 Motor Vehicle Theft in Canada 1971-2009 6

Figure 4 Unemployment Rate in Canada 1971-2009 8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to

Figure 7 Fertility Rate in Canada 1971-2009 11

Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58

x

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 11: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

CHAPTER ONE

INTRODUCTION

10 Introduction

Crime has always existed as an aspect of human culture ever since the earliest

of civilizations It is generally prohibited by society through criminal laws

advocating punishment by fine or imprisonment Crime has been a major concern for

many countries nowadays including Canada because it is a serious issue that affects

everyone in society Crime is both the calise and consequence of poverty insecurity

and under-development

Becker s (1968) seminal worIC Crime and Punishmenc suggested that an

individual decides whether or not to participate in crime by comparing the costs and

benefits of crime Beckers theory of deterrence is an application of the general

theory of rational behaviour under uncertainty Beckers vork Nas then extended by

Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to

empirically test the economic model of crime He suggested that individuals have to

decide the allocation of their time between legitimate and illegitimate activities

Significant theoretical and empirical developments have been made since the

Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework

for the economic analysis of crime by assuming potential offenders as economically

rational and utility maximizing They theoretically related crime rate to various

1

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 12: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

factors such as law enforcement socio-economic variables as well as demographic

compositions The bulk of empirical studies such as Entorf and Spengler (2000)

Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is

(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the

etIect of benefits and costs of legal and illegal activities on crime

In a world of increasing crime policymakers and criminologists have focused

much on crime prevention To increase the efficiency of the investment in crin1c

prevention an understanding of the variables that influence the potential criminals

consideration of the costs and benefits of committing crime is necessary By

knowing what causes crime societies can better fight it

Research on the economic determinants of criminal behaviour based on the

Becker-Ehrlich model has received an enormous amount of attention by sociologists

and criminologists In fact there are many incentives that cause an individual to

participate in the criminal activities due to the unique economic and political

conditions that characterize every country (Nikolaos and Alexandros 2009)

oJ

Besides economic variables demographic factors as shohTI in the papers of

economists psychologists and crimi~ologists are important also in influencing the

propensity of an individual to be involved in criminal activities For example

Blackmore (2003) found that the demographic factors such as the ratio of women to

men the size of economically active population and the proportion of the population

that is male and aged 15 to 34 years of age show significant impacts on crim rates

2

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 13: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

[n addition Entorf and Spengler (2000) indicated that demographic variables such as

the percentage of foreigners and the percentage of population aged 105-24 years had

significant influences on crimes They suggested that further research focusing on

social and demographic determinants should be carried out

Demographic factors appear to playa ey role in the determination of crime

rates for both property crime and violent crime The Becker-Ehrlich theory was

developed to understand crimes with financial motivation According to Buonannoa

and Montolio (2008) property crime that only involve the taking of money or

property is better explained by economic variables such as youth unemployment

rate The economic variables explain a great amount of the variation between

property crimes with clear economic motivations

On the other hand individuals have different propensities to commit violent

crimes Violent crimes are rarely due to financial motivation Violent crime can be

categorised as a crime in which the offender uses violent force upon the victim

Therefore the theory of Becker and Ehrlich is not as effective in understanding the

occurrence of this kind of crime The distribution of the propensity of the people to

commit violent crime seems to be more important than the economic factors

3

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 14: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

11 Background of Study

This study focuses on total crime and two specific crime types including

homicide and motor vehicle theft over the period 1971 to 2009 in Canada

Figure 1 Total Crime in Canada 1971-2009

3000000---------~~~~~~~~-~___

en Q)

E middotc u (j 0 ~ 4shy0 Q) ~

E 3

z

2500000

2000000

1500000

1975 1980 1985 1990 1995 2000 2005 Year

Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada

Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery

sexual assault serious assault attempted murder) and property crimes that involve

theft of goods or money without threat or harm to the victim (including breaking and

entering motor vehicle theft mischief offence) Both types of crime rates retlect

security and safety in Canadian society

4

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 15: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK

Figure 1 shows that the total crime reported to police in Canada had been

increasing gradually from 1971 till the early 1990s It fall steadily since then and

reached its lowest level in 2009 to a total of 2172960 crimes Three property

crimes including motor vehicle thefts mischief offences and breaking and entering

explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were

also reported for other crime types such as homicide attempted murder serious

assault and robbery

Figure 2 Total Homicides in Canada 1971-2009

800

750

CIl 7001)

-g

middots ()

0 650 r ~ 0 600~ 1)

0 8 ~ 3 550Z

500

450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005

Source CANSIM database Statistics Canada

Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types

of homicide consist of first-degree murder second-degree murder manslaughter and

infanticide Homicide is considered to be the most serious criminal offence and a

countrys homicide rate can be used as a barometer to measure the level of violence

5

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 16: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise

in homicides cases Such cases reached a peak of 711 in 1977 before gradually

declining with some annual fluctuations Canada experienced a decline in number of

homicide in the early 1990s after peaking in 1991 Since then number of homicides

have fluctuated but had been declining overall It reached another peak of 663 in

2005 Police reported 610 homicides in 2009 which was still remain higher than

number of homicides in the early 1970s

Figure 3 Motor Vehicle Theft in Canada 1971-2009

200000~~----------~------------------~

180000

160000

140000 o

~ 120000 lt+- o 0 v 100000 E l

Z 80000

1975 1980 1985 1990 1995 2000 2005 Year ~

Source CANSIM (database) Statistics Canada

Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009

Police reported motor vehicle thefts are incidents in which a land-based motorized

vehicle is taken or attempted to be taken without the owners authorization Motor

vehicle theft is one of the most frequent police-reported offences in Canada and it is

6

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 17: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

one of the least likely crimes to be solved by police In general motor vehicles are

stolen for joy-riding or re-sale by organized crime groups

After increasing steadily over the 19708 and reached a peak in 1996 of 180123

cases the number of motor vehicle theft had gradually declining In 2009 police

reported 107992 motor vehicle thefts in which the rate was 14 lower than the year

before However it continues to remain well above the levels seen decades earlier

The decrease in police-reported motor vehicle thefts may be due to the

implementation of specialized policies youth prevention programs and increased

use of anti-theft devices like car alarms (Dauvergne 2008)

There are few economic and demographic variables used in this study that

influence crime rate including upemployment rate real gross domestic product

proportion of population of aged 15-24 and fertility rate

7

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 18: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

Figure 4 Unemployment Rate in Canada 1971-2009

12

11 -

~ 10-- d) ~

~ 9 = d)

E 8gt

0-0 E

7d)

= 6

5 1975 1980 1985 1990 1995 2000 2005 Year

Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics

Unemployment rate is defined as the level of unemployment divided by the

labour force Unemployed persons are those who were available for work and were

either on temporary layoff had looked for work in the past 4 weeks or had a job to

start within the next 4 weeks The unemployment rate excludes discouraged workers

who are available to work but no longer actively seeking employment

Unemployment is a difficult experience for many Canadians It can bring varying

hardships for individuals and their families in addition to the loss of work and

income As shown in figure 4 unemployment rate reached its highest levels in 1983

(120) and 1993 (114) following two major recessions in Canada The

unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009

The unemployment rate in 2009 was 22 higher than in 2008

8

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 19: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009

1400~------------------------------~~

ea 1200 0 0 s ea -g 1000s ea U s 0

800 0 - c-O 0 ~ 600 v ~

1975 1980 1985 1990 1995 2000 2005 Year

Source Organization for Economic Co-operation and Development (OECD) iLibrary

Real GOP is gross domestic product in constant dollars It is a macroeconomic

measure of the value of output economy adjusted for price changes An increase in

GOP is linked to higher economic growth and hence with a higher standard of living

Real gross domestic product in Canada increased steadily since early ] 970s It

dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease

since the 1990-91 recession (Figure 5)

9

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 20: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009

20

- ltf2 19-- -t N

I If) 18 -0

d) on ~

117 t 2-~

160 0 0

4-lt 0 t 150middotE 0 0 140

0

13 1975 1980 1985 1990 1995 2000 2005 Yeu

Source CANSIM (database) Statistics Canada

Figure 6 shows the proportion of population aged 15 to 24 in Canada from

1971 to 2009 The number of people aged between 15 and 24 has been calculated by

aggregating two original age groups 15-19 and 20-24 The age composition of the

population is one of the most prominent explanations for changes in crime rates

Canadas baby-boom which occurred between 1947 and 1966 had a significant

impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early

1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of

population aged 15-24(1356) was 008 fewer than previous year

10

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 21: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

Figure 7 Fertility Rate in Canada 1971-2009

22~--------------~--------------~--~

20

19

18

17

16

15 I

141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year

Source OECD iLibrary

Total fertility rate is the average number of children that would be born per

woman if all women lived to the end of their childbearing years and bore children

according to a given fertility rate at each age It is calculated by adding up the age-

specific fertility rates defined over five yearly intervals Figure 7 shows the total

fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987

the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI

that and reached a peak of 171 on 1990 but still below the replacement level of 21

children per woman The fertility rate then declined again and reached its lowest

level ever recorded in 2000 at 149 children per woman The decline in fertility rate

was due to the large increase in the pmticipation of women in the Canadian labour

force and significant cultural and religious changes in Canadian society (Ragan

20 I 0) Since then the fertility rate had experienced an upward trend back up to 168

11

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 22: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

in 2008 The recent increase in fertility rate was caused by a rise in births to older

women who are delaying tIrst childbirth until they are in their 30s or forties The

fertility rate was then slightly decreased in 2009 to 166 children per woman

12 Problem Statement

Crime and its impact on society is one of the most important issues in Canada

over the past few years The number of police-reported crime in Canada declined in

2009 continuing the general drop seen over the past decade since peaking in early

1990s There were about 43000 less crimes reported to the police in 2009 compared

to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as

a whole has declined in recent years some regions have been found to have

experienced increased crime rates and overall it remains an important issue for the

society

Various factors such as economic and demographics factors will affec crime

rate Economic factors are expected to be good determinants of property crime since

there is clear financial motivation on property crime Economic variables explain a

great amount of the variation of property crime On the other hand it is more

difticult to use the economic theory to analyse violent crimes as the prosperity of the

individuals to commit crime is more impoliant than the economic environment

Hence demographic factors seem to be an important determinant for violent crime

12

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 23: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

Economic variables included in this study are unemployment rate and real

gross domestic product The unemployment-crime relationship has been one of the

focal points in the economic literature of crime Unemployment can cause those

affected to have difficulties integrating into society and the economy which can lead

people to commit crime as a way to acquire status The bulk of literature such as

Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)

and Buonannon and Montolio (2008) suggested that the issue of increasing crime

rates was often related to unemployment The unemployment-crime relationship had

been widely examined in the past and had obtained many different conclusions The

strength of this relationship remains ambiguous both in its nature and in its

robustness

Unemployment rate can have ~oth positive and negative impacts on criminal

activity through the increasing criminal motivations (Becker 1968) and the reducing

criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)

said that there is positive relationship between unemployment and crime because the

marginal return from legitimate earning activities is lower than before when

individual is unemployed and therefore one is more likely to commit crime In

contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked

to crime because the expenditure on property and luxury goods reduced when people

are unemployed Moreover they prefer to be at home or in close neighbourhoods

Hence they may have more protection to their property and as such the number of

crime will reduce

13

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14

Page 24: THE CRIMINOGENIC EFFECTS OF ECONOMIC AND … Criminogenic Effects Of Economic and Demographic... · perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka pendek

Real gross domestic product is another economic factor of crime frequently

noted in the literature Crime theory suggests that crimes especially property crimes

increases and decreases with industrial expansion and contraction whereby crime

rates increase during downtums and decrease in periods of good economIC

conditions The opportunity cost of crimes increases in an expanding economy

Hence an increase in gross domestic product causes a decrease in the crime rate

(Blackmore 2003) However few previous studies suggested that gross domestic

product might have positive relationship with crime such as studies done by Ali and

Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there

is prosperity and more lucrative items to steal when the country has a higher gross

domestic product A higher gross domestic product expected to be more attractive

for criminals since they entail greater opportunities Consequently the net effect of

real gross domestic product on crime rates could be ambiguous and it depends on the

type of crimes being examined

There are only a limited number of literatures in Canada exammmg the

demographic factors influencing crime rates Many of the literature reviewed only

examine the economic factors of crime such as those by Chamlin and Cochran

(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood

and Koinis (2011) They did not include a complete set of crime-influencing

variables in their empirical models Omission of demographic variables will lead to

misspecification of the model Two demographic variables included in this study are

age structure of the population and fertility rate

14