EXPLORING THE RELATIONSHIP BETWEEN CRIME, UNEMPLOYMENT AND WAGE INEQUALITY
Socioeconomic factors and their impact on criminal behaviour have been subjects of research for the last few decades. The ability to identify specific socioeconomic factors that affect crime rates and the extent of their causal relationship, will help policymakers make better decisions. This article seeks to highlight, first, that there is a negative correlation between socio-economic development and crime, and, second, that while there is a positive correlation between unemployment and crime, wage inequality has a more significant impact on crime rates. As a result, the author asserts that employment policies must go beyond simply providing job opportunities to also addressing economic disparities.
Socio-Economic Development and Crime
Crime has officially been recognized as a sustainable development issue, with the 16th goal specifically referring to the State’s responsibility to actively combat all forms of organized crime and promote peaceful societies. This acknowledgement has bolstered the States effort to devise crime prevention programs to reduce crime and consequently, aid development. It has been found that the volume and nature of criminal behavior are impacted by socioeconomic development. There exists substantial evidence supporting the contention that there are certain ‘geographic hotspots’ for crime and that such area are laden with different forms of disadvantage. There is also a substantial link between social characteristics, social interactions, and crime, according to research. Along similar lines of reasoning, another study, wherein the author included a measure of inequality in his regression, and asserted that the degree of economic development is a factor shown to be positively connected to property crime rates in cross-national research. It is therefore, argued that evidence as it exists suggests that development is most likely criminogenic. However, it is difficult to determine the precise factors that may have a direct influence on crime rates. As a result, a general degree of socioeconomic development is considered, and this development is quantified using a variety of parameters like employment, wage equality, education, social equality, environmental factors, urbanization etc.
Before delving any further, the author would like to discuss some anomalies that might affect similar cross-national crime research in this area. Firstly, definitions of the particular crimes that are being studied might vary from state to state. Secondly, various factors affect the extent to which crimes are reported. Thirdly, crime statistics could also be manipulated for various reasons and appropriate authorities might not be releasing the accurate statistics that are required for research. Fourthly, research from different countries that do not have a similar social, economic and political milieu cannot be applied blindly in all cases. For example, how individuals in a high income developed country react to inequality might not hold true for low income or developing countries.
Crime, Unemployment and Wage Inequality
The author has chosen two broad parameters, viz. unemployment and wage inequality to understand the relationship between socio-economic development and crime. These parameters cannot be studied in isolation and may overlap with others in some parts, although the author has tried their best to avoid such overlap.
With the advancement in technology and general socio-economic disparities in countries, unemployment has been an issue in developing and developed countries alike. Overall, data from various countries and empirical research indicates that there is a positive correlation between unemployment and crime. Most scholars agree that aggregate crime increases with aggregate unemployment on a macro-level. However, there is a lot of ambiguity with regards to the individual impact of unemployment and crime. Researchers generally agree that the relationship between crime and unemployment is hard to contextualize for that very reason. Given the wide range of estimates on the subject, the state of the economy cannot accurately analyze the evolution of crime rates, as found by a research that studied crime rates during the 1990s in the US.
However, there exists research to the contrary, that disagrees with this strong correlation between employment and crime as described previously. While they agree that there is a positive correlation between the two variables evidence suggests that unemployment’s effect on crime is insignificant and inconsistent. An authoritative study substantiates this opinion and concludes that unemployment is not a key determinant of crime. Another research that looked at the demographics of crimes found that 79% of criminals were employed. It further concluded that crime rates were not affected by a decrease in the unemployment rate.
A recent empirical investigation used population-wide Danish Register Data, and matched individual records of prime aged Danish males from 1985-2000 with their police records. The study did not take statistics of unemployment rates, but rather job displacement so as to exclude people who are voluntarily unemployed. According to the findings, there is a strong link between job displacement and crime. People who have been displaced are much more likely to commit a crime. This impact is more obvious in terms of property crime, which increased 26% with higher job displacement.
Greater inequality and poverty, according to the same study, amplify the impact of job displacement on property crime in the immediate aftermath of displacement which bolsters the subsequent conclusion that there is a substantial impact of wage inequality on crime rates as well. Evidence from multiple studies indicates that the substantial increase in wage inequality over the past decades has contributed immensely to increased criminal behaviour. Another study tried this approach and concluded that continued falls in the relative wages of unskilled men and increases in male unemployment in England and Wales acted as incentives to engage in criminal activity.
Furthermore, in the recent decades, there has been increased focus on the economic theory of crime that attempts to understand criminal behavior through economic gain an individual gets from criminal activity. A real increase in income increases the opportunity cost of crime, hence reducing the incentive to engage in criminal activity as the economic gain that one would attain through a criminal activity is now relatively lesser. The economic viewpoint presupposes humans to be rational participants, and their decisions between criminal and noncriminal behavior to be a matter of absolute and relative economic necessity.
Scholars like Becker (1968) further assert that the major determinant of criminal activity is the cost benefit analysis that an individual does before committing the crime. Using this theory, scholars have hypothesized that areas of high inequality, where high income individuals are placed next to poor individuals, (who have low return from the market) might frustrate unsuccessful individuals who might seek out crime as a consequence. The greater the inequality, the higher this strain and the greater the inducement for low-status individuals to commit crime. This has also been referred to as the strain theory. The study further concluded that there is a strong relationship between violent crime and income inequality. The conclusion is such that as the gap in legitimate income between the poor and the rich increases, the poor will perceive greater and greater marginal returns from illegitimate activity, which would further incentivize them to participate in criminal activities. On the other hand, when this gap narrows, the bottom half of the income distribution will have less incentive to commit crime.
This raises the question of whether the government should focus more resources in eliminating wage disparities and job displacement rather than simply offering work opportunities, which are generally temporary in nature. According to The World Inequality Report, 2022, released on the 7th December, 2021, the wealthiest 10% makes 20 times more than the poorest 50%, and their overall share has gone down to a mere 13%. The Report concluded that India stands out as a poor and very unequal country, with an affluent elite. Along similar lines, the author asserts that in order to reduce recidivism, government programs should focus more on minimizing economic disparity rather than just offering temporary employment opportunities to inmates who have recently been released from prison. Skill development, educational opportunities and jobs that offer stability are more likely to reduce crime in the State than just being employed in jobs that pay meagre wages.
The relationship between crime and socio-economic development is definitely not a neglected area of research; nonetheless, there appears to be a lack of consistency when it comes to arriving at a uniform conclusion. Furthermore, it is difficult to identify all possible related elements, and even if they have been identified, it is difficult to isolate them and explain their causal influence conclusively. However, after a thorough review of literature available, certain generalized conclusions can be made.
Firstly, most research has concluded that there is a direct correlation between unemployment and crime in a community, with a stronger relationship on a macro level. The extent of this causal relationship remains in contention still. Sudden job loss, job displacement, to be specific, shows a greater increase in crime than general unemployment. More consistent results show that wage inequality and crime have a strong positive correlation. This is supported by the economic theory of crime, which states that greater wages raise the opportunity cost of criminal activity while poverty, on the other hand, exacerbates income disparities, making crime a more attractive proposition.
*The article has been written by Hunar Malik, a 3rd-year BA. LLB student from Gujarat National Law University.*