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EFFECT OF CRIME ON POVERTY IN NIGERIA
Abstract
The link between crime and poverty was considered in this work by controlling for economic growth. That is, the study examined the cointegration of these variables and based on previous work; the issue of causal relationship among these variables were studied. Moreover, the study extends the theory of rational choice to poverty situation in Nigeria by testing the crime-wealth hypothesis in rational choice theory. In testing these hypotheses, the study used data set from 1990 to 2012 and analysed data through the estimation of bounds test; vector error correction model and Granger causality test. Also, for policy making the levels of shocks convergence were determined by variance decomposition test. However, the results showed that there is existence of short-run impact of crime on poverty and a unidirectional causality of crime affecting poverty using the Granger causality which support the crime-wealth hypothesis. In addition, growth played crucial role by impacting on poverty in the short-run and further, a bidirectional relationship was obtained between growth and poverty in the Granger causality. Based on these results, the study suggested that the policy makers should encourage policies that can improve economic growth with the possibility that crime may be reduced in the country and consequently, the reduction of poverty as well..
Keywords: crime, poverty, growth, bounds test approach, vector error correction model and Granger causality.