Inequality and Violent Crime

In this article we take an empirical cross-country perspective to investigate the robustness and causality of the link between income inequality and crime rates. First, we study the correlation between the Gini index and, respectively, homicide and robbery rates along different dimensions of the data (within and between countries). Second, we examine the inequality-crime link when other potential crime determinants are controlled for. Third, we control for the likely joint endogeneity of income inequality in order to isolate its exogenous impact on homicide and robbery rates. Fourth, we control for the measurement error in crime rates by modelling it as both unobserved country-specific effects and random…