The Problems on Income Inequality

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2019/04/19
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In this part, we continue to briefly summarize our empirical analyses based on the ARDL model techniques adopted. The findings of this study are summarized below.

Firstly, the objectives of the study were analyzed using cointegration analysis tests and the ARDL bound test on the national level data, covering the period of 2004-2016. The first step taken in the cointegration test involved carrying out a unit root test for each variable and determining their order of integration. The results indicated that all the variables in our analysis were integrated at the order of first difference, showing that they are non-stationary on levels, but stationary at I(1).

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From determining the stationarity of variables, we were able to go on with cointegration tests between violent crime and income inequality, and their related socio-economic variables and governance indicators, to examine the long-run effects of the economic variables and good governance indicators on violent crime in the Nigerian crime index.

The empirical results of both objectives of the study indicated evidence of cointegration between the variables used in the study on violent crime, income inequality in the Nigerian crime index, and economic growth.

Secondly, the empirical findings from the regression of four models on objective one indicated that there was a long-term relationship, except for the rule of law and the interaction section for the rule of law and income inequality (INEROL). The rule of law is not affected by the economic condition. In models 3 and 4, columns 3 and 4, the coefficient of income inequality displayed a positive sign and was significant at the 1% level, which coincides with our expectation that an increase in income inequality increases the murder rate in Nigeria. A 1 percent increase in income inequality (Gini index) increases the murder rate by 2.88 and 3.28 percent respectively.

Thirdly, the regression results show that the coefficient of education has a significant effect on the murder rate, although the study’s results revealed that a 1 percent decrease in education level increases the murder rate by 1.70, 5.69 and 2.15 percent respectively. Improved educational attainment decreases subsequent murder rates via its positive effect on economic growth and reduced inequality.

Therefore, the policy implication from these findings is not merely that improved educational performances should be encouraged, but that reforms in educational policy should focus on the income opportunity and employment associated with educational achievement.

Fourthly, the empirical results of this study showed statistically significant effects of unemployment on murder rates. Thus, the size of the unemployment-crime effects relative to the total incidents of murder at the national aggregate implies that policies aimed at improving employment welfare for workers facing obstacles can be effective tools for combating crime. Attention should be given to unemployed individuals and those employed workers who have the worst employment prospects and are most likely to engage with the criminal system.

Various studies on the determinants of income inequality and crime have suggested an increased need to address criminality and reduce income disparities. This study contributes to the body of knowledge by investigating the determinants of income inequality and violent crime rates, as well as causes of income inequality, using time series data for the period 2004-2016 in Nigeria. Three issues concerning income inequality that have drawn much attention in empirical studies were examined: the relationship between income inequality and violent crime (with a focus on murder rates), the primary causes of income inequality, and the increase in crime for the period of study. Eight control variables and one interaction term were used, along with a series of economic and institutional quality variables.

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The problems on income inequality. (2019, Apr 19). Retrieved from https://papersowl.com/examples/the-problems-on-income-inequality/