Graduate Program

Economics

Degree Name

Master of Arts (MA)

Semester of Degree Completion

Spring 2022

Thesis Director

Ahmed S. Abou-Zaid

Thesis Committee Member

Ali R. Moshtagh

Thesis Committee Member

Linda S. Ghent

Abstract

This paper investigates the impact of socio-economic conditions on five major crime heads from 2001-2019 using a panel data set for the Indian states. The paper focus on the great recession of 2008-09, economic growth of the states, and deterrence variables. The paper employed two estimation procedures: panel Fixed-Effect and two-stage least square-fixed effect (2SLS-FE). The 2SLS-FE is preferred over the fixed effect method, where poverty is treated as an endogenous variable with higher education and social sector expenditure as instrumental variables. A dummy variable is used for the period of the great recession. A square of state GDP per capita is used to find evidence of a non-linear relationship between crime and economic growth. Three deterrence variables, namely conviction, arrest, and police strength are used in the model.

The study found that the great recession positively impacted total crime, violent crime, and crime against women. The economic growth (State’s GDPs) positively affects total crime, economic offenses, and crime against women. The study also found evidence of an inverted U-shaped curve (non-linear relationship) between three crime categories and economic growth. The deterrence variables do not seem to have a deterrence effect on crime in the Indian states. However, their coefficients are highly significant but positive. Poverty and unemployment only seem to impact total crime out of all major crime categories.

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