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

Unraveling the intricate relationship between unemployment, population, and poverty in Sub‐Saharan Africa: Does quality of life matter?

“…Studies such as Sugiharti et al (2023), Xue and Zhong (2019), and Ukpere and Slabber (2016) found that unemployment increases poverty, while Xue and Zhong (2019) found that unemployment is a significant cause of urban poverty in China. Vijayakumar (2013) examined the relationship among developing countries' poverty, economic growth, employment and dependency ratio.…”

“…Source: World Development Indicator (WDI, 2021). (Pandey et al, 2022;Sugiharti et al, 2023;Ukpere & Slabber, 2016).…”

“…Unemployment and population growth are few among several factors that affect poverty, especially in Sub-Saharan Africa; the studies the following (Adelowokan et al, 2019;Hassan et al, 2016;Mohammad & David, 2019;Quy, 2016;Sugiharti et al, 2023;Ukpere & Slabber, 2016;Vijayakumar, 2013;Xue & Zhong, 2019).…”

Short-term Gini coefficient estimation using nonlinear autoregressive multilayer perceptron model

“…This metric is not merely an academic construct but has profound implications for societal well-being. It is closely correlated with elevated poverty rates [ 14 ], and its fluctuations can serve as indicators of systemic issues such as restricted upward mobility, entrenched poverty, and burgeoning socio-economic instability. Consequently, the Gini coefficient is an indispensable tool for policymakers, researchers, and international organizations aiming to conduct nuanced evaluations of a country's socio-economic health.…”

Crime Prevention Through Environmental Design for Low-Income Residents (B40) in Sabah, Malaysia

“…Oliveira (2021), who studied low-income housing in Denmark, stated that crimes like theft increase in urban areas due to the larger population size. Indonesia is similar, with crime rates increasing due to population density that creates a big gap between poor and rich (Sugiharti et al, 2023). Crime has become a key issue for Sabahan locals that greatly impacts their QoL.…”