The Role of Economic Crisis and Social Spending in Explaining Crime in Russia

The paper investigates crime rate dynamics and its determinants using a panel data set for the Russian regions over the period 1995-2007. We focus on the determinants of convergence and divergence of crime rates across regions, focusing on the periods of economic turbulence such as the 1998 financial crisis. We also simulate the impact of the 2008-10 financial crisis on crime rates in Russia and identify the impact of government spending on reducing crime. Real income, unemployment level, and income inequality are found to be the most important factors explaining the crime rates. High levels of urbanization are also closely linked to higher crime rates. We find that the observed convergence in the regional crime rates during the 1998 crisis was driven mainly by the deteriorating crime situation in the regions with relatively low crime rates. The finding allows us to draw policy conclusions with respect to the role of the anti-crisis government programs in reducing crime. With respect to the types of crime, our analysis confirms that economic and property crimes tend to be the most responsive to the changing economic conditions.