A relationship between income inequality and crime, time series

A great deal of criminological and economicresearch investigate the relationship between income inequality and economicgrowth following Becker’ study (1968). As a variety of social phenomena, lackof resources or the unequal distribution of the resources can be driven tosociety the crime or vice versa (i.e.

Brush, 2007). The relationship between incomeinequality and economic growth and some key social variables, politicalconflict, gender, education, health, and crime are explored (Jiang et al., 2012). Most ofstudies in the literature stated the hypothesis that economic incentives tocommit crimes are higher in areas with greater inequality (Ehrlich, 1973). Somestudies show that various factors are responsible for promoting crime in theworld. such as Lee (2002). Kelly (2000) found that the robbery, assault andoverall violent crime are strongly aggravated by income inequality.

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 Some of the income and crime studiesinvestigates the income inequality and crime relationship in a macroperspective such as Gillani et al. (2009). The author used a time series dataset to examine the crime and other factor relationship such as unemployment andpoverty.

For this purpose they applied a Granger causality test on the 1975 to2007 data set. Results of their study indicated that there is a clearrelationship between  unemployment,poverty and crime. Similarly Gilliani et al (2009) paper, Altindag (2009)examine how the unemployment affects on crime using country level data set. Toexamination the relationship, the author applied  Ordinary Least Square (OLS) and 2 stage LeastSquare (2SLS) techniques on country level data for European countries. Theresults showed that unemployment has a positive influence on property ofcrimes.

Also, the author point out that the 2SLS estimates are larger than OLS.Brush (2007) is another study used the country level data of the United States toestimate income inequality and crime relationship applying a cross sectionaland also a time series analysis. While cross sectional analysis find a positiverelationship between income inequality and crime, time series analysis resultsshow a negative coefficient for crime variable.  On the other hands of these macro studiesthere are some research in the literature focused in the micro perspectivewhile searching the income and crime relationship. For example, Omotor (2012)uses micro level data set to examine the relationship for Nigeria. The authorused OLS and the results indicate a significant effect of income on crime.Another finding of this study represent that crimes are triggered due to theinefficient performance of law enforcement in Nigeria.

 This study examines whether or not anincrease crime level can cause a decrease income level (or opposite) for thispurpose in the Unites States. It specifically focuses before and after GreatRecession period because fundamentally, recessions impact on economicalvariables in a negative way, such as, economic growth, unemployment rate andincome inequality level. According to National Bureau of Economic Research,unemployment rate has risen 5% in the first quarter after the Great Recessionperiod. The An increase of the unemployment rate may trigger to crime level,for instance Heinemann, and Verner(2006) stated that unemployment is a factor motivating crime and homicidalespecially in urban areas. Therefore, it is important to understand howthe recession period impacted on the income and crime relationship.

This paperis organized as follows: the detailed information about the data set and methodis given in the Experimental part in section 2. Section 3 presents theanalytical results. Section 4 provides the concluding comments.