Exploration of macroeconomic effects on criminality in Indonesia

Criminal issues receive special attention from the public to researchers. The presence of crime has a detrimental impact on the surrounding environment. Therefore we are motivated to conduct research to look at the causes of crime from a different perspective, namely macroeconomics. This study examines the effect of macroeconomic variables such as inequality, income per capita, inflation, and unemployment on crime in Indonesia. The methods used are Autoregressive Distributed Lag (ARDL), FMOLS, and DOLS from 2000-2019. The research data utilized sources from the Central Bureau of Statistics and the World Development Indicators. The latest research using this method finds that inequality, inflation, and unemployment have a significant positive effect in the long run, while income per capita has a significant negative effect. Meanwhile, short-term estimates find consistent signs of income per capita and inequality that have a significant effect. Interestingly, inflation and unemployment have no effect on crime. On the other hand, inequality and income per capita were found to have an effect in the short term. Therefore, policymakers take action to increase equity, improve the economy, control inflation, and create jobs to reduce crime.

Automated summary

Criminal issues are of great concern to the public and researchers. This research examines the impact of macroeconomic variables on crime in Indonesia. The study finds that inequality, inflation, and unemployment have a significant positive effect in the long run, while income per capita has a significant negative effect. Short-term estimates show consistent signs of the impact of income per capita and inequality. Interestingly, inflation and unemployment have no effect on crime. Policymakers are advised to take actions to increase equity, improve the economy, control inflation, and create jobs in order to reduce crime.