Inequality and crime revisited: effects of local inequality and economic segregation on crime

Economic inequality has long been considered an important determinant of crime. Existing evidence, however, is mostly based on inadequately aggregated data sets, making its interpretation less than straightforward. Using tract- and county-level U.S. Census panel data, I decompose county-level income inequality into its within- and across-tract components and examine the extent to which county-level crime rates are influenced by local inequality and economic segregation. I find that the previously reported positive correlation between violent crime and economic inequality is largely driven by economic segregation across neighborhoods instead of within-neighborhood inequality. Moreover, there is little evidence of a significant empirical link between overall inequality and crime when county- and time-fixed effects are controlled for. On the other hand, a particular form of economic inequality, namely, poverty concentration, remains an important predictor of county-level crime rates.