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    Income Inequality, Unemployment, Governance and Crime Rate

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    there are few empirical studies on socioeconomic determinants and violent crimes Saridakis (2004). Moreover, there are many studies carried out to determine the effect of unemployment on the violent crime rate. The existing studies recommend that higher unemployment is connected with the occurrence of higher crime. The studies that found a negative relationship between unemployment and violent crime such as; Saridakis and Splengler (2008); Saridakis (2004) and Raphael and Winter-Ebmer (2001).

    Saridakis, (2004) determine the effect of socio-economic and demographic determinants on violent crime in the United State (U.S) on a time-series data for the period of 1960-2000. The findings show that there is no long-run effect of the unemployment rate on violent crime, but in short-run are statistically significant related. Still, Saridakis, (2008) used the United Kingdom time-series data for the period of 1960-2000 in England and Wales. He used the cointegration model to determine the effect of the unemployment rate, beer consumption, and deterrence on all the categories of violent crime.

    The results show that unemployment insignificant with the serious crime rate except that of assault in the long-run. Which is contrary to the finding of Carmichael and Ward, (2001) who found a positive and significantly affect on unemployment on burglary crime in the United Kingdom for the period of 1989-1996, but there is a negative relationship between unemployment and violent crime.

    In another study, Saridakis and Spengler (2009) examined the relationship between unemployment on both property and violent crime for the period of 1991 and1998 in Greece. They employed the GMM method. The results show that unemployment has an effect on property crime and negative effect on violent crime. Haddad and Moghda (2010), conducted a study in Iran for the period 1997-2005.

    Using panel data, the results revealed that economic variables such as unemployment, income inequality, real GDP and family income are the main determinant of property crime such as burglary and for violent crime such as rape and murder are insignificantly related. Moreover, Sokram et al, (2009), conduct a study in Trinidad and Tobago using the time-series data for the period of 1970-2007. They employed the VAR model to analyses the impact of a socio-economic determinant on crime rates such as murder and kidnapping. The findings show that during the period of the study the socio-economic determinants have a strong impact on violent crime.

    Their findings show that unemployment and crime are positively connected, an increase in unemployment show that the lack of opportunities for legitimate work, and thus set down the opportunity to commit criminal activities. Whereas, another study from the Philippines revealed that unemployment is the main determinant of violent crime rate mostly on rape Gillado and Tan Cruz, (2004). In relation to the insignificant effect of unemployment and crime rate, Aric (2007) have shown that there is no strong argument that unemployment makes individuals to inclined to crime, even at the macroeconomic level, rising unemployment is the prerequisite to an increase in criminal activity.

    In a related study, Arvernite and Defina, (2006) conduct a panel data study in United State for the period of 1986-2000. Their findings revealed that the relationship is an insignificant and negative effect of the unemployment rate on property crime and robbery rate for the period of the study. On the other side, Weatherborn (2005), found that there is no significant relationship between unemployment and crimes such as breaking, motor vehicle theft and stealing in Australia for the period of the study.

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