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

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Abstract

Earlier studies on income inequality and crime have typically used total income or total earnings. However, it is quite likely that it is 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 on any type of crime. Using a traditional, aggregate, measure of income yields mainly insignificant effects on crime.

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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2005:20.

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Length: 27 pages
Date of creation: 27 Jun 2005
Date of revision:
Publication status: Forthcoming in Oxford Bulletin of Economics and Statistics.
Handle: RePEc:hhs:uunewp:2005_020
Contact details of provider: Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/Email:


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Keywords: Crime; Earnings dynamics; Inequality;

Other versions of this item:

Find related papers by JEL classification:
  • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
  • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
  • J39 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Other
  • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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  1. Robert A. Moffitt & Peter Gottschalk, 2002. "Trends in the Transitory Variance of Earnings in the United States," Economic Journal, Royal Economic Society, vol. 112(478), pages C68-C73, March.
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  14. Donohue, John J. & Levitt, Steven D., 2000. "The Impact of Legalized Abortion on Crime," Berkeley Olin Program in Law & Economics, Working Paper Series qt00p599hk, Berkeley Olin Program in Law & Economics.
  15. Edmark, Karin, 2003. "The Effects of Unemployment on Property Crime: Evidence from a Period of Unusually Large Swings in the Business Cycle," Working Paper Series 2003:14, Uppsala University, Department of Economics.
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  17. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
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Cited by:

  1. Ayse Imrohoroglu & Antonio Merlo & Peter Rupert, 2006. "Understanding the determinants of crime," Working Paper 0602, Federal Reserve Bank of Cleveland.
  2. Baharom, A.H. & Habibullah, M.S., 2008. "Crime and Income Inequality: The Case of Malaysia," MPRA Paper 11871, University Library of Munich, Germany.
  3. 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.
  4. 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.
  5. Bach, Stefan & Corneo, Giacomo & Steiner, Viktor, 2011. "Optimal top marginal tax rates under income splitting for couples," CEPR Discussion Papers 8435, C.E.P.R. Discussion Papers.
  6. 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.
  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. 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).
  9. 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.
  10. André De Palma & Alexandre Guimard, 2014. "Urbanism, an overview," Working Papers hal-00969574, HAL.
  11. 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.
  12. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.
  13. Hallberg, Daniel, 2006. "Cross-national differences in income poverty among Europe´s 50+," Working Paper Series 2006:14, Uppsala University, Department of Economics.
  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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