Assessing substitution and complementary effects amongst crime typologies

"This paper aims at assessing how offenders allocate their effort amongst several types of crime. Specifically, complementary and substitution effects are investigated amongst the number of recorded homicides, robberies, extortions and kidnapping, receiving stolen goods, falsity and drug-related crimes. Furthermore, the extent to which crime is detrimental for economic growth is also analysed. The case-study country is Italy, and the time span under analysis is from the first quarter of 1981 to the fourth quarter of 2004. A Vector Error Correction Mechanism (VECM) is employed after having assessed the integration and cointegration status of the variables under investigation. Empirical findings show that, in the long run, an increase in the overall welfare has a negative impact on the most serious crimes. In addition, the long-run elasticities reveal symmetric results in terms of positive and negative relationships amongst types of crime. In the short run, the cross-deterrence elasticities highlight a complementary effect between more serious crimes (i.e. robberies, extortions and kidnapping) and milder crimes (i.e. drug-related crimes and falsity) and a substitution effect amongst all other types of offences. Policy implications are drawn."