LAUSR

This paper exploits a dynamic panel data model to analyze the endogeneity of certain deterrent covariates, measurement errors in crime and inertial features of crime, and to check for unobserved heterogeneity in order to extract more precise and reliable estimates of the deterrent effect of law enforcement in North Carolina. It uses panel data on 90 counties of North Carolina over the period 2003–2012. After checking various socioeconomic covariates, among the deterrent variables, likelihood of arrest and conviction always showed deterrent effects on criminal behavior for different kinds of violent and property crimes. Since property crimes have relatively higher inertia than violent crimes, their associated long-run elasticities with respect to significant deterrence variables are greater, which implies that allocating more resources to increasing the likelihood of arrest for property crimes can effectively decrease them in the long run.