By Patrick Guillaumont and Frédéric Puech

Relying on samples taken from developing and developed countries, several recent papers, such as those by Fajnzylber et al. (2002), Soares (2004) and Neumayer (2003, 2005), have emphasized the influence of macro-economic variables on crime. Those studies highlight the impact of the average level of income and of its growth rate. But none of them consider the impact of its instability. This paper argues that the factors corresponding to economic shocks or macro-economic instability have a significant and robust influence on crime. It suggests that this influence comes from disappointed anticipations, formed during periods of rapid increase of income, which, to some extent, generates frustration and possibly crime. It also suggests that illegal activities are used by some agents to compensate their loss of income and, in this way, smooth their consumption. It mainly deals with the direct effect of instability on crime. Nevertheless, since macro instability reduces growth, as it has been largely substantiated in literature, and growth has been found to have a negative impact on crime, it can also be supposed to have an indirect effect on crime through the growth rate.

CERDI - Centre d'Études et de Recherches sur le Développement International, 2006. 26p.