IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v11y2023i2p62-d1067235.html
   My bibliography  Save this article

The Nexus between Crime Rates, Poverty, and Income Inequality: A Case Study of Indonesia

Author

Listed:
  • Lilik Sugiharti

    (Department of Economics, Universitas Airlangga, Surabaya 60115, Indonesia)

  • Rudi Purwono

    (Department of Economics, Universitas Airlangga, Surabaya 60115, Indonesia)

  • Miguel Angel Esquivias

    (Department of Economics, Universitas Airlangga, Surabaya 60115, Indonesia)

  • Hilda Rohmawati

    (Department of Economics, Universitas Airlangga, Surabaya 60115, Indonesia)

Abstract

This study examines whether income inequality and poverty are determinants of crime rates across 34 provinces in Indonesia. Three indicators of income inequality and four poverty measures are tested to examine whether the dimension and degree of unequal welfare distribution are linked to crime occurrences. We use panel data from 2010 to 2019 with the Generalized Method of Moments (GMM) approach. The findings indicate that higher income levels and wider income inequality are associated with higher crime rates. Our first indicator of income inequality, non-food expenditure, has a larger impact on crime rates than our second and third indicators, i.e., the gap in food expenditure and the Gini ratio. Poverty is also positively associated with crime. The wider the poverty gap (a measure of poverty) and the severity index, the higher the deprivation levels among the poor, which lead to more crime. The significant and positive effect of poverty on crime rates, and the positive nexus between crime, income, and inequality suggest that Indonesia will face a higher crime risk as the country becomes increasingly more affluent. In such a scenario, policymakers can leverage education and investment (domestic and foreign) to minimize the crime rate. The government could also strengthen crime prevention programs, crime settlement systems, and policing in Indonesia, and raise the budget for social assistance.

Suggested Citation

  • Lilik Sugiharti & Rudi Purwono & Miguel Angel Esquivias & Hilda Rohmawati, 2023. "The Nexus between Crime Rates, Poverty, and Income Inequality: A Case Study of Indonesia," Economies, MDPI, vol. 11(2), pages 1-15, February.
  • Handle: RePEc:gam:jecomi:v:11:y:2023:i:2:p:62-:d:1067235
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/11/2/62/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2227-7099/11/2/62/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Malte Sandner & Pia Wassmann, 2018. "The Effect of Changes in Border Regimes on Border Regions Crime Rates: Evidence from the Schengen Treaty," Kyklos, Wiley Blackwell, vol. 71(3), pages 482-506, August.
    2. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
    3. Zhe Song & Taihua Yan & Tangyang Jiang, 2020. "Poverty aversion or inequality aversion? The influencing factors of crime in China," Journal of Applied Economics, Taylor & Francis Journals, vol. 23(1), pages 679-708, January.
    4. Bebonchu Atems, 2020. "Identifying the Dynamic Effects of Income Inequality on Crime," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(4), pages 751-782, August.
    5. Dongxu Wu & Zhongmin Wu, 2012. "Crime, inequality and unemployment in England and Wales," Applied Economics, Taylor & Francis Journals, vol. 44(29), pages 3765-3775, October.
    6. Brush, Jesse, 2007. "Does income inequality lead to more crime? A comparison of cross-sectional and time-series analyses of United States counties," Economics Letters, Elsevier, vol. 96(2), pages 264-268, August.
    7. Aaron Chalfin, 2014. "What is the Contribution of Mexican Immigration to U.S. Crime Rates? Evidence from Rainfall Shocks in Mexico," American Law and Economics Review, American Law and Economics Association, vol. 16(1), pages 220-268.
    8. Brigitte Buhmann & Lee Rainwater & Guenther Schmaus & Timothy M. Smeeding, 1988. "Equivalence Scales, Well‐Being, Inequality, And Poverty: Sensitivity Estimates Across Ten Countries Using The Luxembourg Income Study (Lis) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
    9. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    10. repec:bla:revinw:v:34:y:1988:i:2:p:115-42 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Antonicelli, Margareth & Drago, Carlo & Costantiello, Alberto & Leogrande, Angelo, 2025. "Analyzing Income Inequalities across Italian regions: Instrumental Variable Panel Data, K-Means Clustering and Machine Learning Algorithms," MPRA Paper 124910, University Library of Munich, Germany.
    2. Nadeem Iqbal & Awais Hassan & Talha Waheed, 2025. "AI-driven crime prediction: a systematic literature review," Journal of Computational Social Science, Springer, vol. 8(2), pages 1-47, May.
    3. Lilik Sugiharti & Miguel Angel Esquivias & Mohd Shahidan Shaari & Ari Dwi Jayanti & Abdul Rahim Ridzuan, 2023. "Indonesia’s poverty puzzle: Chronic vs. transient poverty dynamics," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2267927-226, October.
    4. Umer Zaman & Joshua Chukwuma Onwe & Pabitra Kumar Jena & Ogochukwu C. Anyanwu & Joy Eleojo Ebeh & Obonetse Fulu, 2023. "Unraveling the intricate relationship between unemployment, population, and poverty in Sub‐Saharan Africa: Does quality of life matter?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(5), pages 3930-3945, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pazzona, Matteo, 2024. "Revisiting the Income Inequality-Crime Puzzle," World Development, Elsevier, vol. 176(C).
    2. Lilik Sugiharti & Miguel Angel Esquivias & Mohd Shahidan Shaari & Lussi Agustin & Hilda Rohmawati, 2022. "Criminality and Income Inequality in Indonesia," Social Sciences, MDPI, vol. 11(3), pages 1-19, March.
    3. Tiago Freire, 2015. "City of God Redux: Inequality, Migration, and Violent Crime in Brazil between 1980 and 2000," ERSA conference papers ersa15p658, European Regional Science Association.
    4. Katarzyna Growiec & Jakub Growiec, 2016. "Bridging Social Capital and Individual Earnings: Evidence for an Inverted U," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 601-631, June.
    5. Deniz Sevinc & Edgar Mata Flores & Simon Collinson, 2020. "Are there inequality spillovers? Evidence through a modified inequality measure and European dynamics of inequality," Working Papers 545, ECINEQ, Society for the Study of Economic Inequality.
    6. Pedro Salas-Rojo & Juan Gabriel Rodríguez, 2022. "Inheritances and wealth inequality: a machine learning approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 27-51, March.
    7. Akanksha Srivastava & Sanjay Mohanty, 2012. "Poverty Among Elderly in India," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 109(3), pages 493-514, December.
    8. Cem Baslevent & Meltem Dayoglu, 2005. "The Effect of Squatter Housing on Income Distribution in Urban Turkey," Urban Studies, Urban Studies Journal Limited, vol. 42(1), pages 31-45, January.
    9. Bruce Headey & Peter Krause & Roland Habich, 1993. "East Germany: Rising Incomes, Unchanged Inequality and the Impact of Redistributive Government 1990-92," Discussion Papers of DIW Berlin 72, DIW Berlin, German Institute for Economic Research.
    10. Leonardo Gasparini & Mariana Marchionni & Walter Sosa Escudero, 2000. "Characterization of inequality changes through microeconometric decompositions. The case of Greater Buenos Aires," IIE, Working Papers 025, IIE, Universidad Nacional de La Plata.
    11. Nojedehi, Pedram & Gunay, Burak & O'Brien, William & Papineau, Maya & Azar, Elie & Schweiker, Marcel & Ulukavak Harputlugil, Gülsu & Ganiç Saglam, Nese, 2024. "Examining disparities in energy poverty and indoor environmental quality satisfaction among Canadian households," Energy Policy, Elsevier, vol. 194(C).
    12. Lars Osberg, 2002. "How Much does Work Matter for Inequality? Time, Money and Inequality in International Perspective," LIS Working papers 326, LIS Cross-National Data Center in Luxembourg.
    13. Torregrosa-Hetland, Sara, 2016. "Sticky Income Inequality In The Spanish Transition (1973-1990)," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 34(1), pages 39-80, March.
    14. Christina Behrendt, 2000. "Holes in the Safety Net? Social Security and the Alleviation of Poverty in a Comparative Perspective," LIS Working papers 259, LIS Cross-National Data Center in Luxembourg.
    15. David Brady, 2003. "The Politics of Poverty: Left Political Institutions, the Welfare State and Poverty," LIS Working papers 352, LIS Cross-National Data Center in Luxembourg.
    16. Lopez-Pablos, Rodrigo A., 2008. "Notas sobre Descomposiciones Microeconométricas: Un Análisis Antropométrico [Notes on Microeconometric Decompositions: An Anthropometric Analysis]," MPRA Paper 8222, University Library of Munich, Germany.
    17. Bruce Headey & Mark Wooden, 2004. "The Effects of Wealth and Income on Subjective Well‐Being and Ill‐Being," The Economic Record, The Economic Society of Australia, vol. 80(s1), pages 24-33, September.
    18. Udo Ebert & Patrick Moyes, 2011. "Inequality of Well-Being and Isoelastic Equivalence Scales," Working Papers V-333-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    19. repec:ebl:ecbull:v:4:y:2002:i:3:p:1-5 is not listed on IDEAS
    20. Eduardo Ley, 2005. "Whose inflation? A characterization of the CPI plutocratic gap," Oxford Economic Papers, Oxford University Press, vol. 57(4), pages 634-646, October.
    21. Vincent Geloso & Vadim Kufenko & Klaus Prettner, 2016. "Demographic change and regional convergence in Canada," Economics Bulletin, AccessEcon, vol. 36(4), pages 1904-1910.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:11:y:2023:i:2:p:62-:d:1067235. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.