LAUSR

ABSTRACT Do inequality, unemployment and deterrence affect crime over the long run? Regional Studies. This paper investigates the long-run relationship between crime, inequality, unemployment and deterrence using US state-level data from 1978 to 2013. The novelty is to use non-stationary panels with a factor structure. The results show that: (1) a crime-theoretical model fits the long-run relationship well; (2) income inequality and unemployment have a positive impact on crime, whereas that of deterrence is negative; (3) the effect of income inequality on crime is larger when inequality is measured on a wider population proportion; and (4) property crime is generally highly sensitive to the deterrence effect of police.