Unemployment, Immigrants, Price Level, Population and Crime: Cointegration Analysis of Malaysia

Abstract

The crime index in Malaysia shown two distinctive overall trend patterns; increasing trend from 1982 to 2009 and decreasing from 2009 to 2016. On the other hand, the country’s real GDP growth fluctuated substantially over the 34 years of period. Nevertheless, Malaysia has achieved its highest growth rate at 6.2% in the third quarter of 2017. Being a developing country with an open economy policy and industrialized market, it is, therefore, becoming important to study whether the economic condition does affect the crime rate in Malaysia. Hence, the purpose of this study is to investigate the relationship between economic variables (unemployment rate, price level, total immigrants, and population) and the crime index. Utilizing time-series data from the year 1982 to 2016 the study began with the analysing unit root test. The data must be proven stationary in order to proceed with other analyses. The cointegration analysis was done to capture the long-run equilibrium between variables. Findings showed that the economic variables investigated are crucial determinants and do impact the crime rate in Malaysia.