Causality Relationship between Income Inequality and Crime in Iran

Exacerbating income inequality and increasing crimes give rise to waste of human and financial resources of the society. However, causality direction between income inequality and crime remains a controversial issue. Applying Hsiao’s causality test for the 1984-2014 period, this study examines the direction of causality between these social problems in Iran. The crimes under study include crimes against property (embezzlement, bribery, forgery, theft and bounced checks) and violent crimes (murder, battery, duress and harassment). In addition, Gini coefficient is used as an inequality index. The optimal lag lengths are one for crimes against property and two for violent crimes, respectively. Findings indicate significant bidirectional causal relationships between income inequality and two kinds of crimes.