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THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS IN CANADA
Chew Lee Ping
BV 6925 Bachelor of Economics with HonoursCS29
(Industrial Economics)2012
2012
fusat Kbidmat Maklumat Akadcmik UNIVERSm MALAYSIA SARAWAK
PKHIDMAT MAKLUMAT AKADEMIK
11111 IIIllfiiiflllli 11111 1000245027
THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS IN CANADA
CHEW LEE PING
This project is submitted in partial fulfilment of the requirements for the degree of Bachelor of Economics with Honours
(Indyenstrial Economics)
Faculty of Economics and Business UNIVERSITI MALAYSIA SARAWAK
2012
I
I
Statement of Originality
The work describe in the Final Year Project entitled The Criminogenic Effects of Economic and Demographic Characteristics in
Canada is to the best of the authors knowledge that of the author except
where due reference is made
I
bull
Date Submitted Chew Lee Ping 23291
ABSTRACT
THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC
CHARACTERISTICS IN CANADA
BY
CHEW LEE PING
This study examines the relationships between crimes and their economic and
demographic determinants in Canada Cointegration and causality analyses have
been canied out in this study for the sample period of 1971 to 2009 The results of
cointegration analysis indicate that there is a cointegrated vector between the
variables used for total crime and homicide but no long-mn relationship existed
between motor vehicle theft and economic and demographic variables Granger
causality tests show that total crime and homicide are affected by unemployment
rate real gross domestic product (GDP) proportion of population aged 15-24 and
fertility rate in the long-run Besides that unemployment rate proportion of
population aged 15-24 and fe11ility rate Granger cause total crime whereas the
proportion of population aged 15-24 Granger causes fertility rate in the short-mn
There is no short-mn causality existed between motor vehicle theft and the economic
and demographic variables used in Canada
ABSTRAK
KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI
KANADA
Oleh
Chew Lee Ping
Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan
demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan
dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi
menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah
yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan
jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi
dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan
pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar
(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl
tI
jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang
berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala
perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka
pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan
pembolehubah ekonomi dan demografi yang digunakan di Kanada
ACKNOVLEDGEMENT
First of all I would like to express my special gratitude to my supervisor Dr
Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot
by giving useful advices and suggestions for me
I also like to give my deepest thanks to all the lecturers in Faculty of
Economics and Business (FEB) UNIMAS for sharing their valuable knowlege
throughout this study period
Last but not least I would like to thank my family members for their moral
support and financial support My grateful thanks also go to my friends and
coursemates who help and give me encouragement to complete my final year
project
VI
Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK
T ABLE OF CONTENTS
LIST OF FIGURES ix
LIST OF TAI3LES x
CHAPTER ONE INTRODUCTION
10 Introduction 1
11 Background of Study 4
12 Problem Statement 12
13 Objective of the Study 16
131 General Objective 16
132 Specific Objective 16
14 Significance of the Study 17
15 Scope of Study 18
CHAPTER TWO LITERATURE REVIEW
20 Introduction 19
21 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developed Countries 20
22 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developing Countries 31
23 Conclusion 39
CHAPTER THREE METHODOLOGY
30 Introduction41
Vll
r I
I
31 Model of Study 42
32 Data Collection 43
33 Data Analysis 44
331 Unit Root Test 44
332 JohansenmiddotmiddotJuselius Co integration Test 45
333 Granger Causality Test 46
CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION
40 Introduction 51
41 Unit Root Test Results 52
42 Johansen-Juselius Cointegration Test Results 53
43 Granger Causality Test Results 56
431 VEC Granger Causaility Test Results 56
432 VAR Granger Causality rest Results 57
CHAPTER FIVE CONCLUSION
50 Introduction 59
51 Concluding Remarks 59
52 Policy Implications 62
53 Limitation and Recommendation of Study 64
REFERENCES 67
viii
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
fusat Kbidmat Maklumat Akadcmik UNIVERSm MALAYSIA SARAWAK
PKHIDMAT MAKLUMAT AKADEMIK
11111 IIIllfiiiflllli 11111 1000245027
THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS IN CANADA
CHEW LEE PING
This project is submitted in partial fulfilment of the requirements for the degree of Bachelor of Economics with Honours
(Indyenstrial Economics)
Faculty of Economics and Business UNIVERSITI MALAYSIA SARAWAK
2012
I
I
Statement of Originality
The work describe in the Final Year Project entitled The Criminogenic Effects of Economic and Demographic Characteristics in
Canada is to the best of the authors knowledge that of the author except
where due reference is made
I
bull
Date Submitted Chew Lee Ping 23291
ABSTRACT
THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC
CHARACTERISTICS IN CANADA
BY
CHEW LEE PING
This study examines the relationships between crimes and their economic and
demographic determinants in Canada Cointegration and causality analyses have
been canied out in this study for the sample period of 1971 to 2009 The results of
cointegration analysis indicate that there is a cointegrated vector between the
variables used for total crime and homicide but no long-mn relationship existed
between motor vehicle theft and economic and demographic variables Granger
causality tests show that total crime and homicide are affected by unemployment
rate real gross domestic product (GDP) proportion of population aged 15-24 and
fertility rate in the long-run Besides that unemployment rate proportion of
population aged 15-24 and fe11ility rate Granger cause total crime whereas the
proportion of population aged 15-24 Granger causes fertility rate in the short-mn
There is no short-mn causality existed between motor vehicle theft and the economic
and demographic variables used in Canada
ABSTRAK
KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI
KANADA
Oleh
Chew Lee Ping
Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan
demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan
dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi
menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah
yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan
jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi
dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan
pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar
(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl
tI
jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang
berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala
perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka
pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan
pembolehubah ekonomi dan demografi yang digunakan di Kanada
ACKNOVLEDGEMENT
First of all I would like to express my special gratitude to my supervisor Dr
Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot
by giving useful advices and suggestions for me
I also like to give my deepest thanks to all the lecturers in Faculty of
Economics and Business (FEB) UNIMAS for sharing their valuable knowlege
throughout this study period
Last but not least I would like to thank my family members for their moral
support and financial support My grateful thanks also go to my friends and
coursemates who help and give me encouragement to complete my final year
project
VI
Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK
T ABLE OF CONTENTS
LIST OF FIGURES ix
LIST OF TAI3LES x
CHAPTER ONE INTRODUCTION
10 Introduction 1
11 Background of Study 4
12 Problem Statement 12
13 Objective of the Study 16
131 General Objective 16
132 Specific Objective 16
14 Significance of the Study 17
15 Scope of Study 18
CHAPTER TWO LITERATURE REVIEW
20 Introduction 19
21 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developed Countries 20
22 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developing Countries 31
23 Conclusion 39
CHAPTER THREE METHODOLOGY
30 Introduction41
Vll
r I
I
31 Model of Study 42
32 Data Collection 43
33 Data Analysis 44
331 Unit Root Test 44
332 JohansenmiddotmiddotJuselius Co integration Test 45
333 Granger Causality Test 46
CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION
40 Introduction 51
41 Unit Root Test Results 52
42 Johansen-Juselius Cointegration Test Results 53
43 Granger Causality Test Results 56
431 VEC Granger Causaility Test Results 56
432 VAR Granger Causality rest Results 57
CHAPTER FIVE CONCLUSION
50 Introduction 59
51 Concluding Remarks 59
52 Policy Implications 62
53 Limitation and Recommendation of Study 64
REFERENCES 67
viii
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
I
I
Statement of Originality
The work describe in the Final Year Project entitled The Criminogenic Effects of Economic and Demographic Characteristics in
Canada is to the best of the authors knowledge that of the author except
where due reference is made
I
bull
Date Submitted Chew Lee Ping 23291
ABSTRACT
THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC
CHARACTERISTICS IN CANADA
BY
CHEW LEE PING
This study examines the relationships between crimes and their economic and
demographic determinants in Canada Cointegration and causality analyses have
been canied out in this study for the sample period of 1971 to 2009 The results of
cointegration analysis indicate that there is a cointegrated vector between the
variables used for total crime and homicide but no long-mn relationship existed
between motor vehicle theft and economic and demographic variables Granger
causality tests show that total crime and homicide are affected by unemployment
rate real gross domestic product (GDP) proportion of population aged 15-24 and
fertility rate in the long-run Besides that unemployment rate proportion of
population aged 15-24 and fe11ility rate Granger cause total crime whereas the
proportion of population aged 15-24 Granger causes fertility rate in the short-mn
There is no short-mn causality existed between motor vehicle theft and the economic
and demographic variables used in Canada
ABSTRAK
KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI
KANADA
Oleh
Chew Lee Ping
Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan
demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan
dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi
menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah
yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan
jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi
dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan
pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar
(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl
tI
jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang
berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala
perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka
pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan
pembolehubah ekonomi dan demografi yang digunakan di Kanada
ACKNOVLEDGEMENT
First of all I would like to express my special gratitude to my supervisor Dr
Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot
by giving useful advices and suggestions for me
I also like to give my deepest thanks to all the lecturers in Faculty of
Economics and Business (FEB) UNIMAS for sharing their valuable knowlege
throughout this study period
Last but not least I would like to thank my family members for their moral
support and financial support My grateful thanks also go to my friends and
coursemates who help and give me encouragement to complete my final year
project
VI
Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK
T ABLE OF CONTENTS
LIST OF FIGURES ix
LIST OF TAI3LES x
CHAPTER ONE INTRODUCTION
10 Introduction 1
11 Background of Study 4
12 Problem Statement 12
13 Objective of the Study 16
131 General Objective 16
132 Specific Objective 16
14 Significance of the Study 17
15 Scope of Study 18
CHAPTER TWO LITERATURE REVIEW
20 Introduction 19
21 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developed Countries 20
22 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developing Countries 31
23 Conclusion 39
CHAPTER THREE METHODOLOGY
30 Introduction41
Vll
r I
I
31 Model of Study 42
32 Data Collection 43
33 Data Analysis 44
331 Unit Root Test 44
332 JohansenmiddotmiddotJuselius Co integration Test 45
333 Granger Causality Test 46
CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION
40 Introduction 51
41 Unit Root Test Results 52
42 Johansen-Juselius Cointegration Test Results 53
43 Granger Causality Test Results 56
431 VEC Granger Causaility Test Results 56
432 VAR Granger Causality rest Results 57
CHAPTER FIVE CONCLUSION
50 Introduction 59
51 Concluding Remarks 59
52 Policy Implications 62
53 Limitation and Recommendation of Study 64
REFERENCES 67
viii
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
ABSTRACT
THE CRIMINOGENIC EFFECTS OF ECONOMIC AND DEMOGRAPHIC
CHARACTERISTICS IN CANADA
BY
CHEW LEE PING
This study examines the relationships between crimes and their economic and
demographic determinants in Canada Cointegration and causality analyses have
been canied out in this study for the sample period of 1971 to 2009 The results of
cointegration analysis indicate that there is a cointegrated vector between the
variables used for total crime and homicide but no long-mn relationship existed
between motor vehicle theft and economic and demographic variables Granger
causality tests show that total crime and homicide are affected by unemployment
rate real gross domestic product (GDP) proportion of population aged 15-24 and
fertility rate in the long-run Besides that unemployment rate proportion of
population aged 15-24 and fe11ility rate Granger cause total crime whereas the
proportion of population aged 15-24 Granger causes fertility rate in the short-mn
There is no short-mn causality existed between motor vehicle theft and the economic
and demographic variables used in Canada
ABSTRAK
KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI
KANADA
Oleh
Chew Lee Ping
Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan
demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan
dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi
menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah
yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan
jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi
dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan
pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar
(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl
tI
jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang
berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala
perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka
pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan
pembolehubah ekonomi dan demografi yang digunakan di Kanada
ACKNOVLEDGEMENT
First of all I would like to express my special gratitude to my supervisor Dr
Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot
by giving useful advices and suggestions for me
I also like to give my deepest thanks to all the lecturers in Faculty of
Economics and Business (FEB) UNIMAS for sharing their valuable knowlege
throughout this study period
Last but not least I would like to thank my family members for their moral
support and financial support My grateful thanks also go to my friends and
coursemates who help and give me encouragement to complete my final year
project
VI
Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK
T ABLE OF CONTENTS
LIST OF FIGURES ix
LIST OF TAI3LES x
CHAPTER ONE INTRODUCTION
10 Introduction 1
11 Background of Study 4
12 Problem Statement 12
13 Objective of the Study 16
131 General Objective 16
132 Specific Objective 16
14 Significance of the Study 17
15 Scope of Study 18
CHAPTER TWO LITERATURE REVIEW
20 Introduction 19
21 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developed Countries 20
22 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developing Countries 31
23 Conclusion 39
CHAPTER THREE METHODOLOGY
30 Introduction41
Vll
r I
I
31 Model of Study 42
32 Data Collection 43
33 Data Analysis 44
331 Unit Root Test 44
332 JohansenmiddotmiddotJuselius Co integration Test 45
333 Granger Causality Test 46
CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION
40 Introduction 51
41 Unit Root Test Results 52
42 Johansen-Juselius Cointegration Test Results 53
43 Granger Causality Test Results 56
431 VEC Granger Causaility Test Results 56
432 VAR Granger Causality rest Results 57
CHAPTER FIVE CONCLUSION
50 Introduction 59
51 Concluding Remarks 59
52 Policy Implications 62
53 Limitation and Recommendation of Study 64
REFERENCES 67
viii
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
ABSTRAK
KESAN JENAYAH BAGI CIRI-CIRI EKONOMI DAN DEMOGRAF[ DI
KANADA
Oleh
Chew Lee Ping
Kajian ini mengkaji hubungan antara kes jenayah dan penentu ekonomi dan
demografi di Kanada Analisis kointegrasi dan ujian penyeJab telah dijalankan
dalam kajian ini bagi tempoh 1971 hingga 2009 Keputusafl analisis kointegrasi
menunjukkan bahawa terdapat satu yektor kointegrasi wujud antara pembolehubah
yang digunakan untuk jumlah jenayah dan pembunuhan tetapi tiada hubungan
jangka panjang wujud an tara kecurian kenderaan motor dan pembolehubah ekonomi
dan demografi Ujian Penyebab Granger menunjukkan bahawa jumlah jenayah dan
pembunuhan dipengaruhi oleh kadar pengangguran Keluaran Dalam Negara Kasar
(KDNK) benar perkadaran penduduk berumur 15-24 dan kadar kesuburan dalanl
tI
jangka panjang Selain daripada itu kadar peogangguran perkadaran penduduk yang
berumur 15-24 dan kadar kesuburan mengakibatkan jumlah jenayah manakala
perkadaran penduduk berumur 15-24 mempengaruhi kadar kesuburan dalam jangka
pendek Tiada hubungan jangka pendek wujud antara kecurian kenderaan motor dan
pembolehubah ekonomi dan demografi yang digunakan di Kanada
ACKNOVLEDGEMENT
First of all I would like to express my special gratitude to my supervisor Dr
Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot
by giving useful advices and suggestions for me
I also like to give my deepest thanks to all the lecturers in Faculty of
Economics and Business (FEB) UNIMAS for sharing their valuable knowlege
throughout this study period
Last but not least I would like to thank my family members for their moral
support and financial support My grateful thanks also go to my friends and
coursemates who help and give me encouragement to complete my final year
project
VI
Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK
T ABLE OF CONTENTS
LIST OF FIGURES ix
LIST OF TAI3LES x
CHAPTER ONE INTRODUCTION
10 Introduction 1
11 Background of Study 4
12 Problem Statement 12
13 Objective of the Study 16
131 General Objective 16
132 Specific Objective 16
14 Significance of the Study 17
15 Scope of Study 18
CHAPTER TWO LITERATURE REVIEW
20 Introduction 19
21 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developed Countries 20
22 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developing Countries 31
23 Conclusion 39
CHAPTER THREE METHODOLOGY
30 Introduction41
Vll
r I
I
31 Model of Study 42
32 Data Collection 43
33 Data Analysis 44
331 Unit Root Test 44
332 JohansenmiddotmiddotJuselius Co integration Test 45
333 Granger Causality Test 46
CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION
40 Introduction 51
41 Unit Root Test Results 52
42 Johansen-Juselius Cointegration Test Results 53
43 Granger Causality Test Results 56
431 VEC Granger Causaility Test Results 56
432 VAR Granger Causality rest Results 57
CHAPTER FIVE CONCLUSION
50 Introduction 59
51 Concluding Remarks 59
52 Policy Implications 62
53 Limitation and Recommendation of Study 64
REFERENCES 67
viii
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
ACKNOVLEDGEMENT
First of all I would like to express my special gratitude to my supervisor Dr
Evan Lau Poh Hock for his guidance throughout this study He has helped me a lot
by giving useful advices and suggestions for me
I also like to give my deepest thanks to all the lecturers in Faculty of
Economics and Business (FEB) UNIMAS for sharing their valuable knowlege
throughout this study period
Last but not least I would like to thank my family members for their moral
support and financial support My grateful thanks also go to my friends and
coursemates who help and give me encouragement to complete my final year
project
VI
Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK
T ABLE OF CONTENTS
LIST OF FIGURES ix
LIST OF TAI3LES x
CHAPTER ONE INTRODUCTION
10 Introduction 1
11 Background of Study 4
12 Problem Statement 12
13 Objective of the Study 16
131 General Objective 16
132 Specific Objective 16
14 Significance of the Study 17
15 Scope of Study 18
CHAPTER TWO LITERATURE REVIEW
20 Introduction 19
21 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developed Countries 20
22 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developing Countries 31
23 Conclusion 39
CHAPTER THREE METHODOLOGY
30 Introduction41
Vll
r I
I
31 Model of Study 42
32 Data Collection 43
33 Data Analysis 44
331 Unit Root Test 44
332 JohansenmiddotmiddotJuselius Co integration Test 45
333 Granger Causality Test 46
CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION
40 Introduction 51
41 Unit Root Test Results 52
42 Johansen-Juselius Cointegration Test Results 53
43 Granger Causality Test Results 56
431 VEC Granger Causaility Test Results 56
432 VAR Granger Causality rest Results 57
CHAPTER FIVE CONCLUSION
50 Introduction 59
51 Concluding Remarks 59
52 Policy Implications 62
53 Limitation and Recommendation of Study 64
REFERENCES 67
viii
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
Pusat Kbidmat Maklumat Akademik UNlVERSm MALAYSIA SARAWAK
T ABLE OF CONTENTS
LIST OF FIGURES ix
LIST OF TAI3LES x
CHAPTER ONE INTRODUCTION
10 Introduction 1
11 Background of Study 4
12 Problem Statement 12
13 Objective of the Study 16
131 General Objective 16
132 Specific Objective 16
14 Significance of the Study 17
15 Scope of Study 18
CHAPTER TWO LITERATURE REVIEW
20 Introduction 19
21 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developed Countries 20
22 Review of the Criminogenic Effects of Economic and Demographic
Characteristics in Developing Countries 31
23 Conclusion 39
CHAPTER THREE METHODOLOGY
30 Introduction41
Vll
r I
I
31 Model of Study 42
32 Data Collection 43
33 Data Analysis 44
331 Unit Root Test 44
332 JohansenmiddotmiddotJuselius Co integration Test 45
333 Granger Causality Test 46
CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION
40 Introduction 51
41 Unit Root Test Results 52
42 Johansen-Juselius Cointegration Test Results 53
43 Granger Causality Test Results 56
431 VEC Granger Causaility Test Results 56
432 VAR Granger Causality rest Results 57
CHAPTER FIVE CONCLUSION
50 Introduction 59
51 Concluding Remarks 59
52 Policy Implications 62
53 Limitation and Recommendation of Study 64
REFERENCES 67
viii
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
31 Model of Study 42
32 Data Collection 43
33 Data Analysis 44
331 Unit Root Test 44
332 JohansenmiddotmiddotJuselius Co integration Test 45
333 Granger Causality Test 46
CHAPTER FOUR EMPIRICAL RESULTS AND DISCUSSION
40 Introduction 51
41 Unit Root Test Results 52
42 Johansen-Juselius Cointegration Test Results 53
43 Granger Causality Test Results 56
431 VEC Granger Causaility Test Results 56
432 VAR Granger Causality rest Results 57
CHAPTER FIVE CONCLUSION
50 Introduction 59
51 Concluding Remarks 59
52 Policy Implications 62
53 Limitation and Recommendation of Study 64
REFERENCES 67
viii
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
LIST OF TABLES
Table 1 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developed Countries 28
Table 2 Summary of Reviewed Literatures on the Criminogenic Effects of
Economic and Demographic Characteristics in Developing Countries 37
Table 3 KPSS Test Results 52
Table 4 10hansen-luseIius Cointegration Test Results 53
Table 5 VEC Granger Causality Test Results 56
Table 6 VAR Granger Causality Test Results 57
IX
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
LIST OF FIGURES
Figure 1 Total Crime in Canada 1971-2009 4
Figure 2 Total Homicides in Canada 1971-2009 5
Figure 3 Motor Vehicle Theft in Canada 1971-2009 6
Figure 4 Unemployment Rate in Canada 1971-2009 8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009 9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009 to
Figure 7 Fertility Rate in Canada 1971-2009 11
Figure 8 Direction of Short-Run Causal Relationship for Modell and 2 58
x
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
CHAPTER ONE
INTRODUCTION
10 Introduction
Crime has always existed as an aspect of human culture ever since the earliest
of civilizations It is generally prohibited by society through criminal laws
advocating punishment by fine or imprisonment Crime has been a major concern for
many countries nowadays including Canada because it is a serious issue that affects
everyone in society Crime is both the calise and consequence of poverty insecurity
and under-development
Becker s (1968) seminal worIC Crime and Punishmenc suggested that an
individual decides whether or not to participate in crime by comparing the costs and
benefits of crime Beckers theory of deterrence is an application of the general
theory of rational behaviour under uncertainty Beckers vork Nas then extended by
Ehrlich (1973) by considering a time allocation model Ehrlich was the first one to
empirically test the economic model of crime He suggested that individuals have to
decide the allocation of their time between legitimate and illegitimate activities
Significant theoretical and empirical developments have been made since the
Becker-Ehrlich model Becker (1968) and Ehrlich (1973) both provided a framework
for the economic analysis of crime by assuming potential offenders as economically
rational and utility maximizing They theoretically related crime rate to various
1
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
factors such as law enforcement socio-economic variables as well as demographic
compositions The bulk of empirical studies such as Entorf and Spengler (2000)
Nikolaos and Alexandros (2009) and Sookram Basdeo Sumesar and Sarida is
(2010) used the Becker-Ehrlich model to investigate the impact of deterrence and the
etIect of benefits and costs of legal and illegal activities on crime
In a world of increasing crime policymakers and criminologists have focused
much on crime prevention To increase the efficiency of the investment in crin1c
prevention an understanding of the variables that influence the potential criminals
consideration of the costs and benefits of committing crime is necessary By
knowing what causes crime societies can better fight it
Research on the economic determinants of criminal behaviour based on the
Becker-Ehrlich model has received an enormous amount of attention by sociologists
and criminologists In fact there are many incentives that cause an individual to
participate in the criminal activities due to the unique economic and political
conditions that characterize every country (Nikolaos and Alexandros 2009)
oJ
Besides economic variables demographic factors as shohTI in the papers of
economists psychologists and crimi~ologists are important also in influencing the
propensity of an individual to be involved in criminal activities For example
Blackmore (2003) found that the demographic factors such as the ratio of women to
men the size of economically active population and the proportion of the population
that is male and aged 15 to 34 years of age show significant impacts on crim rates
2
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
[n addition Entorf and Spengler (2000) indicated that demographic variables such as
the percentage of foreigners and the percentage of population aged 105-24 years had
significant influences on crimes They suggested that further research focusing on
social and demographic determinants should be carried out
Demographic factors appear to playa ey role in the determination of crime
rates for both property crime and violent crime The Becker-Ehrlich theory was
developed to understand crimes with financial motivation According to Buonannoa
and Montolio (2008) property crime that only involve the taking of money or
property is better explained by economic variables such as youth unemployment
rate The economic variables explain a great amount of the variation between
property crimes with clear economic motivations
On the other hand individuals have different propensities to commit violent
crimes Violent crimes are rarely due to financial motivation Violent crime can be
categorised as a crime in which the offender uses violent force upon the victim
Therefore the theory of Becker and Ehrlich is not as effective in understanding the
occurrence of this kind of crime The distribution of the propensity of the people to
commit violent crime seems to be more important than the economic factors
3
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
11 Background of Study
This study focuses on total crime and two specific crime types including
homicide and motor vehicle theft over the period 1971 to 2009 in Canada
Figure 1 Total Crime in Canada 1971-2009
3000000---------~~~~~~~~-~___
en Q)
E middotc u (j 0 ~ 4shy0 Q) ~
E 3
z
2500000
2000000
1500000
1975 1980 1985 1990 1995 2000 2005 Year
Source Canadian Socio-economic Information Management System (CANSIM) database Statistics Canada
Crimes in Canada are typically divided into two broad categories violence crimes that involve harm or threats of harm to people (including homicide robbery
sexual assault serious assault attempted murder) and property crimes that involve
theft of goods or money without threat or harm to the victim (including breaking and
entering motor vehicle theft mischief offence) Both types of crime rates retlect
security and safety in Canadian society
4
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
Pusat Kbidmat MakJuDiat Akademik U~1VERSm MALAYSIA SARAWAK
Figure 1 shows that the total crime reported to police in Canada had been
increasing gradually from 1971 till the early 1990s It fall steadily since then and
reached its lowest level in 2009 to a total of 2172960 crimes Three property
crimes including motor vehicle thefts mischief offences and breaking and entering
explained the majority of this drop (Brennan and Dauvergne 2011) Decreas(s were
also reported for other crime types such as homicide attempted murder serious
assault and robbery
Figure 2 Total Homicides in Canada 1971-2009
800
750
CIl 7001)
-g
middots ()
0 650 r ~ 0 600~ 1)
0 8 ~ 3 550Z
500
450 middot I I I I I I i Year1975 1980 1985 1990 1995 2000 2005
Source CANSIM database Statistics Canada
Figure 2 shows the nwnber of homicides in Canada during 1971-2009 Types
of homicide consist of first-degree murder second-degree murder manslaughter and
infanticide Homicide is considered to be the most serious criminal offence and a
countrys homicide rate can be used as a barometer to measure the level of violence
5
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
in society As shown in tigure 2 in the early 1970s Canada experienced a sharp rise
in homicides cases Such cases reached a peak of 711 in 1977 before gradually
declining with some annual fluctuations Canada experienced a decline in number of
homicide in the early 1990s after peaking in 1991 Since then number of homicides
have fluctuated but had been declining overall It reached another peak of 663 in
2005 Police reported 610 homicides in 2009 which was still remain higher than
number of homicides in the early 1970s
Figure 3 Motor Vehicle Theft in Canada 1971-2009
200000~~----------~------------------~
180000
160000
140000 o
~ 120000 lt+- o 0 v 100000 E l
Z 80000
1975 1980 1985 1990 1995 2000 2005 Year ~
Source CANSIM (database) Statistics Canada
Figure 3 iHustrates the total motor vehicle theft in Canada from 1971 to 2009
Police reported motor vehicle thefts are incidents in which a land-based motorized
vehicle is taken or attempted to be taken without the owners authorization Motor
vehicle theft is one of the most frequent police-reported offences in Canada and it is
6
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
one of the least likely crimes to be solved by police In general motor vehicles are
stolen for joy-riding or re-sale by organized crime groups
After increasing steadily over the 19708 and reached a peak in 1996 of 180123
cases the number of motor vehicle theft had gradually declining In 2009 police
reported 107992 motor vehicle thefts in which the rate was 14 lower than the year
before However it continues to remain well above the levels seen decades earlier
The decrease in police-reported motor vehicle thefts may be due to the
implementation of specialized policies youth prevention programs and increased
use of anti-theft devices like car alarms (Dauvergne 2008)
There are few economic and demographic variables used in this study that
influence crime rate including upemployment rate real gross domestic product
proportion of population of aged 15-24 and fertility rate
7
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
Figure 4 Unemployment Rate in Canada 1971-2009
12
11 -
~ 10-- d) ~
~ 9 = d)
E 8gt
0-0 E
7d)
= 6
5 1975 1980 1985 1990 1995 2000 2005 Year
Source LABORST A Labour Statistics Database International Labour Organization (lLO) Department of Statistics
Unemployment rate is defined as the level of unemployment divided by the
labour force Unemployed persons are those who were available for work and were
either on temporary layoff had looked for work in the past 4 weeks or had a job to
start within the next 4 weeks The unemployment rate excludes discouraged workers
who are available to work but no longer actively seeking employment
Unemployment is a difficult experience for many Canadians It can bring varying
hardships for individuals and their families in addition to the loss of work and
income As shown in figure 4 unemployment rate reached its highest levels in 1983
(120) and 1993 (114) following two major recessions in Canada The
unemployment rate increased from a decades-low of 60 in 2007 to 83 in 2009
The unemployment rate in 2009 was 22 higher than in 2008
8
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
Figure 5 Real Gross Domestic Product (GDP) in Canada 1971-2009
1400~------------------------------~~
ea 1200 0 0 s ea -g 1000s ea U s 0
800 0 - c-O 0 ~ 600 v ~
1975 1980 1985 1990 1995 2000 2005 Year
Source Organization for Economic Co-operation and Development (OECD) iLibrary
Real GOP is gross domestic product in constant dollars It is a macroeconomic
measure of the value of output economy adjusted for price changes An increase in
GOP is linked to higher economic growth and hence with a higher standard of living
Real gross domestic product in Canada increased steadily since early ] 970s It
dropped in 2009 (128372 billions Canadian Dollar) which was the first decrease
since the 1990-91 recession (Figure 5)
9
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
Figure 6 Proportion of Population of Aged 15-24 in Canada 1971-2009
20
- ltf2 19-- -t N
I If) 18 -0
d) on ~
117 t 2-~
160 0 0
4-lt 0 t 150middotE 0 0 140
0
13 1975 1980 1985 1990 1995 2000 2005 Yeu
Source CANSIM (database) Statistics Canada
Figure 6 shows the proportion of population aged 15 to 24 in Canada from
1971 to 2009 The number of people aged between 15 and 24 has been calculated by
aggregating two original age groups 15-19 and 20-24 The age composition of the
population is one of the most prominent explanations for changes in crime rates
Canadas baby-boom which occurred between 1947 and 1966 had a significant
impact on all aspects of the Canadian economy and society (Foote 1996) As presented in figure 6 the proportion of group aged 15 to 24 had declined since early
1980s as baby-boomers aged and moved into adulthood In 2009 the proportion of
population aged 15-24(1356) was 008 fewer than previous year
10
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
Figure 7 Fertility Rate in Canada 1971-2009
22~--------------~--------------~--~
20
19
18
17
16
15 I
141 _~i~i~iTI~i~i~i~irITi~~i~i~Ir~I~i~imiddot~~~~-~~~~~~~t 1975 1980 1985 1990 1995 2000 2005 Year
Source OECD iLibrary
Total fertility rate is the average number of children that would be born per
woman if all women lived to the end of their childbearing years and bore children
according to a given fertility rate at each age It is calculated by adding up the age-
specific fertility rates defined over five yearly intervals Figure 7 shows the total
fertility rate (birth per woman) in Canada from 1971 to 2009 From 1971 to 1987
the fertility rate in Canada declined signiticantly from 219 to 158 It increased after tI
that and reached a peak of 171 on 1990 but still below the replacement level of 21
children per woman The fertility rate then declined again and reached its lowest
level ever recorded in 2000 at 149 children per woman The decline in fertility rate
was due to the large increase in the pmticipation of women in the Canadian labour
force and significant cultural and religious changes in Canadian society (Ragan
20 I 0) Since then the fertility rate had experienced an upward trend back up to 168
11
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
in 2008 The recent increase in fertility rate was caused by a rise in births to older
women who are delaying tIrst childbirth until they are in their 30s or forties The
fertility rate was then slightly decreased in 2009 to 166 children per woman
12 Problem Statement
Crime and its impact on society is one of the most important issues in Canada
over the past few years The number of police-reported crime in Canada declined in
2009 continuing the general drop seen over the past decade since peaking in early
1990s There were about 43000 less crimes reported to the police in 2009 compared
to previous year (Dauvergne and Turner 2010) While criminal activity in Canada as
a whole has declined in recent years some regions have been found to have
experienced increased crime rates and overall it remains an important issue for the
society
Various factors such as economic and demographics factors will affec crime
rate Economic factors are expected to be good determinants of property crime since
there is clear financial motivation on property crime Economic variables explain a
great amount of the variation of property crime On the other hand it is more
difticult to use the economic theory to analyse violent crimes as the prosperity of the
individuals to commit crime is more impoliant than the economic environment
Hence demographic factors seem to be an important determinant for violent crime
12
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
Economic variables included in this study are unemployment rate and real
gross domestic product The unemployment-crime relationship has been one of the
focal points in the economic literature of crime Unemployment can cause those
affected to have difficulties integrating into society and the economy which can lead
people to commit crime as a way to acquire status The bulk of literature such as
Becker (1968) Cantor and Land (1985) Yoon and Joo (2005) OCinneide (2006)
and Buonannon and Montolio (2008) suggested that the issue of increasing crime
rates was often related to unemployment The unemployment-crime relationship had
been widely examined in the past and had obtained many different conclusions The
strength of this relationship remains ambiguous both in its nature and in its
robustness
Unemployment rate can have ~oth positive and negative impacts on criminal
activity through the increasing criminal motivations (Becker 1968) and the reducing
criminal opportunities effects (Cantor and Land 1985) respectively Becker (1968)
said that there is positive relationship between unemployment and crime because the
marginal return from legitimate earning activities is lower than before when
individual is unemployed and therefore one is more likely to commit crime In
contrast Cantor and Land (1985) indicated pat unemploymeni is negatively linked
to crime because the expenditure on property and luxury goods reduced when people
are unemployed Moreover they prefer to be at home or in close neighbourhoods
Hence they may have more protection to their property and as such the number of
crime will reduce
13
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
Real gross domestic product is another economic factor of crime frequently
noted in the literature Crime theory suggests that crimes especially property crimes
increases and decreases with industrial expansion and contraction whereby crime
rates increase during downtums and decrease in periods of good economIC
conditions The opportunity cost of crimes increases in an expanding economy
Hence an increase in gross domestic product causes a decrease in the crime rate
(Blackmore 2003) However few previous studies suggested that gross domestic
product might have positive relationship with crime such as studies done by Ali and
Peek (2009) and Cerro and Meloni (2000) According to Ali and Peek (2009) there
is prosperity and more lucrative items to steal when the country has a higher gross
domestic product A higher gross domestic product expected to be more attractive
for criminals since they entail greater opportunities Consequently the net effect of
real gross domestic product on crime rates could be ambiguous and it depends on the
type of crimes being examined
There are only a limited number of literatures in Canada exammmg the
demographic factors influencing crime rates Many of the literature reviewed only
examine the economic factors of crime such as those by Chamlin and Cochran
(2000) Tang (2009) Tang (2010) Habibullap and Baharom (2009) and Yearwood
and Koinis (2011) They did not include a complete set of crime-influencing
variables in their empirical models Omission of demographic variables will lead to
misspecification of the model Two demographic variables included in this study are
age structure of the population and fertility rate
14
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