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Article
Publication date: 4 May 2012

Firouz Fallahi, Hamed Pourtaghi and Gabriel Rodríguez

The paper aims to study the effect of the unemployment rate and its volatility on crime in the USA. It proposes that not only the unemployment rate, but also its volatility affect…

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Abstract

Purpose

The paper aims to study the effect of the unemployment rate and its volatility on crime in the USA. It proposes that not only the unemployment rate, but also its volatility affect the crime.

Design/methodology/approach

First, the volatility of the unemployment rate is calculated using ARCH models. Next, using the results from the first stage the ARDL approach to cointegration is used to examine the link between the unemployment rate and its volatility on the crime.

Findings

The cointegrated or long‐run relationships are found only for burglary and motor‐vehicle theft. The results indicate that the unemployment rate has a significant effect on burglary and motor‐vehicle theft only in the short run and the unemployment volatility has a negative effect on motor‐vehicle theft regardless of time span. However, it has a positive effect on burglary in the short run and no effect in the long run.

Originality/value

The effect of unemployment rate on crime is documented in the literature. However, to the best of our knowledge, this is the first paper that emphasizes the importance of unemployment rate volatility on the crime.

Details

International Journal of Social Economics, vol. 39 no. 6
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 11 May 2015

Firouz Fallahi and Gabriel Rodríguez

The purpose of this paper is to use quarterly time series data from Canada and the Canadian provinces to determine if the unemployment rates in the Canadian provinces are…

335

Abstract

Purpose

The purpose of this paper is to use quarterly time series data from Canada and the Canadian provinces to determine if the unemployment rates in the Canadian provinces are converging to the national rate of unemployment.

Design/methodology/approach

First, the authors check for existence of stochastic convergence using recent unit root statistics, see Perron and Rodríguez (2003) and Rodríguez (2007). Second, the authors verify existence of convergence using methods proposed by Volgelsang (1998) and Bai and Perron (1998, 2003). All these methods allows for structural break(s) in the data.

Findings

Results from different unit root tests, without and with structural breaks, confirm that stochastic convergence exists in all provinces. The other results show strong evidence that deterministic convergence exists and the unemployment rates of the Canadian provinces are converging to the unemployment rate of Canada. This conclusion is stronger when multiple breaks are allowed in the trend function using the approach of Bai and Perron (1998, 2003).

Practical implications

Since the authors have verified the existence of stochastic convergence, any intervention in the labor markets of the Canadian provinces to control the provincial unemployment rate would have a temporary effect and these policies will not have a permanent influence on the unemployment rates. However, existence of β-convergence in the Canadian provinces shows that general policies toward lowering the national unemployment rate would decrease the provincial unemployment rates as well.

Originality/value

To the best of the knowledge, the paper attempts to study the unemployment rate convergence in the Canadian provinces using the above-mentioned approaches. These approaches allow the authors to take into consideration the possibility of structural breaks in order to get results that are more accurate.

Details

Journal of Economic Studies, vol. 42 no. 2
Type: Research Article
ISSN: 0144-3585

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