Crime, prison, and female labor supply

This paper introduces the vector autoregressive (VAR) methodology into the mainstream of applied criminological research as an alternative to the estimation of structural models of crime. The paper presents cointegration test statistics for a second-order VAR of crime, prison population, female labor force participation, and durable consumption. Our results for the impact of imprisonment on the crime rate are similar to Levitt's (1996) and substantially larger than previous estimates (e.g., Marvell and Moody, 1994). We find that the short-run response of the crime rate to increased labor force participation of women is larger than the long-run effect. The implication is that major social changes, like the increased labor supply of women, may have surprising impacts and that social institutions may take some substantial period of time to adjust to such major changes.