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Inequality and Crime: Separating the Effects of Permanent and Transitory Income

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  • Matz Dahlberg
  • Magnus Gustavsson

Abstract

Earlier studies on income inequality and crime have typically used total income or total earnings. However, it is quite likely that it is the changes in permanent rather than in transitory income that affects crime rates. The purpose of this paper is therefore to disentangle the two effects by, first, estimating region-specific inequality in permanent and transitory income and, second, estimating crime equations with the two separate income components as explanatory variables. The results indicate that it is important to separate the two effects; while an increase in the inequality in permanent income yields a positive and significant effect on total crimes and three different property crimes, an increase in the inequality in transitory income has no significant effect. Using a traditional, aggregate, measure of income yields insignificant effects on crime. Copyright (c) Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2007.

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Bibliographic Info

Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics and Statistics.

Volume (Year): 70 (2008)
Issue (Month): 2 (04)
Pages: 129-153

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Handle: RePEc:bla:obuest:v:70:y:2008:i:2:p:129-153

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Cited by:
  1. Baharom, A.H. & Habibullah, M.S. & Royfaizal, R. C, 2008. "Convergence of violent crime in the United States: Time series test of nonlinear," MPRA Paper 11926, University Library of Munich, Germany.
  2. Bach, Stefan & Corneo, Giacomo & Steiner, Viktor, 2012. "Optimal top marginal tax rates under income splitting for couples," European Economic Review, Elsevier, vol. 56(6), pages 1055-1069.
  3. Baumann, Florian & Friehe, Tim, 2013. "Status concerns as a motive for crime?," DICE Discussion Papers 93, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  4. Johansson, Fredrik & Klevmarken, Anders, 2006. "Explaining the size and nature of response in a survey on health status and economic standard," Working Paper Series 2006:2, Uppsala University, Department of Economics.
  5. Jie Chen, 2006. "The Dynamics of Housing Allowance Claims in Sweden: A Discrete Time-Hazard Analysis," International Journal of Housing Policy, Taylor & Francis Journals, vol. 6(1), pages 1-29.
  6. Ayse Imrohoroglu & Antonio Merlo & Peter Rupert, 2006. "Understanding the determinants of crime," Working Paper 0602, Federal Reserve Bank of Cleveland.
  7. Gustavsson, Magnus, 2013. "Permanent versus Transitory Wage Differentials and the Inequality-Hours Hypothesis," Working Paper Series, Center for Labor Studies 2013:12, Uppsala University, Department of Economics.
  8. André De Palma & Alexandre Guimard, 2014. "Urbanism, an overview," Working Papers hal-00969574, HAL.
  9. Hallberg, Daniel, 2006. "Cross-national differences in income poverty among Europe´s 50+," Working Paper Series 2006:14, Uppsala University, Department of Economics.
  10. M. B. Gordon & J. R. Iglesias & V. Semeshenko & J. P. Nadal, 2009. "Crime and punishment: the economic burden of impunity," The European Physical Journal B - Condensed Matter and Complex Systems, Springer, vol. 68(1), pages 133-144, March.
  11. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.
  12. Baharom, A.H. & Habibullah, M.S., 2008. "Is crime cointegrated with income and unemployment?: A panel data analysis on selected European countries," MPRA Paper 11927, University Library of Munich, Germany.
  13. Baharom, A.H. & Habibullah, M.S., 2008. "Crime and Income Inequality: The Case of Malaysia," MPRA Paper 11871, University Library of Munich, Germany.
  14. Catalina Gómez Toro & Hermilson Velásquez & Joaquín Andrés Urrego & Juan David Valderrama, 2014. "Efecto de los Ingresos Permanentes sobre el Delito: Un Enfoque Espacial y un Caso de Aplicación," DOCUMENTOS DE TRABAJO CIEF 010900, UNIVERSIDAD EAFIT.

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