Business Cycle and Crime: The Case of British Columbia, Canada

Abstract

Purpose: Economic expansions and contractions are among the factors that influence crime as a social phenomenon. Yet, the magnitude of the impact of economic growth and recession has remained largely unexplored in British Columbia (BC). In this study, the reference business cycle variable (GDP) is measured in relation to four crime categories: fraud, robbery, violence, and property crimes. Design/methodology/approach: We collected data from Statistics Canada on various socioeconomic indicators for the period of 1986-2019. We employed ARDL method and dependent tests based on Hamza and Lau (2013) and Oyelade (2019) to estimate the causal effects. Findings: Our results do not support any long-run relationships among various crime categories and business cycles. However, we found statistically significant short-term effects of business cycles on crime categories. Economic prosperity has reduced crime in all four categories in the short term, while the recession has caused crime to increase. Furthermore, increasing the number of police officers during our study did not reduce these types of crimes except for property crimes. Practical implications:The results of the paper can help the policy makers and the BC government determine what types of crime will increase or decrease when there is an economic recession or boom, which can then help the government and justice system plan ahead in order to control crime occurrences. Originality value: This study is noteworthy as the research methodology and time series data used in this research are for the first time in British Columbia.