Nonlinearity and bidirectional causality in the relationship between violent crime and income persistence: Evidence from a cross-country analysis

This paper is the first study which investigates nonlinearity and bidirectional causality between violent crime and intergenerational income transmission using cross-sectional data for 32 countries. This paper has the distinctive characteristic of combining data on intergenerational income elasticity with those on violent crime rates in two specific points in time across the life course of the cohort, which are when the descendants are young, that is in upper school age, and when the descendants are in middle age, that is in occupational age. A U-shaped relationship exists between violent crime and income persistence in the young period of the cohort, whereas bidirectional causality occurs in middle age. Education is the causal mechanism by which violent crime and income persistence may operate on each other. Moreover, the heterogeneity analysis suggests that redistributive policies oriented to alleviate income inequality are appropriate causal mechanisms to reduce income persistence as well as violent crime in developing countries. JEL Classification: H41; J62; K42; Z13