Examining the Impact of Socioeconomic Factors on Crime Rates: A Panel Study

Abstract

Understanding the underlying causes of crime is vital for economies to prosper. Previous attempts to understand crime drivers from an economic perspective are limited by a country-based approach and variable diversity. Therefore, it is necessary to use a cross-country dataset that considers demographic, economic, and institutional perspectives to reveal common factors affecting crime rates. This study examines the socioeconomic determinants of crime with a panel consisting of 17 countries using the fully modified least squares regression and Dumitrescu and Hurlin causality test. The obtained empirical findings indicate that rapid urbanization and high-rate unemployment are influential factors in increasing crime rates. Besides, real GDP growth and progress in the rule of law reduce crime rates. Empirical results also reveal that real GDP and urbanization Granger cause crime rates, while a bidirectional causal relationship exists between crime rates and the rule of law. The policy implications of these findings are discussed in the conclusion section.