Distributive Politics and Crime
48 Pages Posted: 10 Jun 2019
Date Written: May 23, 2019
Redistribution from central to local governments through fiscal transfers has the potential to reduce crime in local areas by alleviating poverty and unemployment. However, estimating the causal effect of redistribution on crime is complicated by the problem of simultaneity: increased transfers may be targeted precisely where crime is a problem. To address this problem, we use change in malapportionment as an instrumental variable, as malapportionment has a well-known relationship with redistribution. Our research design takes advantage of municipality-level panel data from Japan spanning a major electoral system reform that reduced the level of malapportionment across districts. Naïve estimates with OLS regression show almost no effect of fiscal transfers on crime, whereas the IV results show statistically significant and negative effects. These findings support the argument that redistribution reduces crime, while also raising broader implications about the relationship between Japan’s well-known pattern of distributive politics and its comparatively low crime rates.
Keywords: distributive politics, crime, malapportionment, instrumental variable, Japan
JEL Classification: C26, D72, D78, H2, H23, H5, H7
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