Income Polarization and Crime: Evidence From Indonesia

Abstract

This paper examines the link between income polarization and crime in 33 provinces in Indonesia from 2010 to 2018. Most previous studies used income inequality as an explanatory variable to explain crime. However, income inequality only captures income gaps, not the clustering of individuals. This paper demonstrates that income polarization is an important predictor of crime in Indonesia, especially property crime. Employing system Generalized Methods of Moment (GMM) models for dynamic panel data, this study finds that provinces with higher income polarization are associated with those with higher property crime. There is no significant effect of income polarization on homicide in the case of Indonesia. Furthermore, this study finds no significant effects of income inequality on property crime or homicide.