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Is Inequality really a Major Cause of Violent Crime? Evidence From a Cross-National Panel of Robbery and Violent Theft Rates

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  • Eric Neumayer

Abstract

This article argues that the link between income inequality and violent property crime might be spurious, complementing a similar argument in prior an alysis by the author on the determinants of homicide. In contrast, Fajnzylber, Lederman & Loayza (1998; 2002a, b) provide seemingly strong and robust evidence that inequality causes a higher rate of both homicide and robbery/violent theft even after controlling for country-specific fixed effects. Ou r results suggest that inequality is not a statistically significant determinant, unless either country- specific effects are not controlled for or the sample is artificially restricted to a small number of countries. The reason why the link between inequality and violent property crime might be spur ious is that income inequality is likely to be strongly correlated with country- specific fixed effects such as cultural differences. A high degree of inequality might be socially undesirable for any number of reasons, but that it causes vi! olent crime is far from proven.

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Paper provided by EconWPA in its series Law and Economics with number 0312002.

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Date of creation: 24 Dec 2003
Date of revision: 11 May 2004
Handle: RePEc:wpa:wuwple:0312002

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  1. Paul Collier & Anke Hoeffler, 2002. "Greed and Grievance in Civil War," Economics Series Working Papers WPS/2002-01, University of Oxford, Department of Economics.
  2. Ehrlich, Isaac, 1973. "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 521-65, May-June.
  3. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  4. Collier, Paul & Hoeffler, Anke, 2000. "Greed and grievance in civil war," Policy Research Working Paper Series 2355, The World Bank.
  5. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
  6. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "What causes violent crime?," European Economic Review, Elsevier, vol. 46(7), pages 1323-1357, July.
  7. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
  8. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "Inequality and Violent Crime," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 1-40, April.
  9. Bourguignon Francois, 2009. "Crime as a Social Cost of Poverty and Inequality: A Review Focusing on Developing countries," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
  10. Fleisher, Belton M, 1970. "The Effect of Income on Delinquency: Reply," American Economic Review, American Economic Association, vol. 60(1), pages 257, March.
  11. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  12. Morgan Kelly, 2000. "Inequality And Crime," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 530-539, November.
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