The crime rate of five Latin American countries: does income inequality matter?

Despite the Latin American region being the home to only 9 per cent of the global population, the region has the world's highest combined level of income inequality, with a measured net Gini coefficient of 48.3 (UNICEF, 2011) and has also registered approximately 40 per cent of the world's murders. Additionally, although the latest report published by ECLAC (2019) indicated that the level of income inequality has continued to trend downwards, the region's crime rate has remained persistently high. Thus, suggesting that while there is good reason to believe that income inequality could explain the incidence of crime in the region, the association between income inequality and the crime rate is not symmetrical. This paper aims to examine the asymmetric effect of income inequality on the crime rate of five Latin American countries. Utilising the nonlinear autoregressive distributed lag (NARDL) technique proposed by Shin et al. (2014) on the annual data from 1984 to 2017, this study found the presence of asymmetric cointegration between income inequality and crime rates in Argentina, Brazil, Chile and Columbia.

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