Criminal Behavior and doing business: evidence from dynamic panel data model for selected countries (2009-2015)

Crime is one of the most important non-market choices that has attracted economists since 1960s. Based on rational criminal behavior theory, criminals are rational and respond to related incentive mechanism. This paper purports to investigate the effect of easiness of doing business on criminal behavior for a panel of 100 selected countries for the period 2009-2015. We also control for demographic, socio-economic and law enforcement variables. For doing so, we applied an unbalanced dynamic panel data model and extract our estimation results by two-step GMM-System estimator. Empirical results show that easiness of doing business can reduce all kinds of property crimes. Furthermore, based on estimated results, an increase in competitiveness level of countries would decrease domestic burglary, theft and auto theft. So it seems that any improvement in doing business can reduce criminal behavior and illicit activities due to a decrease in legal activities’ costs.