Violent Crime and the Economy

This thesis examines how the state of the economy in Michigan relates to the violent crime rate in the state. The state of the economy is represented by the independent variables of income and unemployment. An econometric model is created in order to find the ceteris paribus effect of these economic variables on the amount of crime committed in the state in a given year. Data is used from the years 1976-2016. The results of the model show a significant positive relationship between both income and the violent crime rate and unemployment and the violent crime rate. The results were obtained after subjecting the model to specification error testing. The result for unemployment is in-line with much of the literature. The effect of income was unusual, though not unheard of, given past research.