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Inequality and Crime: Separating the Effects of Permanent and Transitory Income *
Author(s) -
Dahlberg Matz,
Gustavsson Magnus
Publication year - 2008
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.2007.00492.x
Subject(s) - economics , economic inequality , inequality , permanent income hypothesis , earnings , income inequality metrics , demographic economics , income distribution , property crime , econometrics , labour economics , violent crime , macroeconomics , mathematics , life cycle hypothesis , sociology , finance , mathematical analysis , criminology
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.