Abstract
There is a long held belief that inequality is a major determinant of violent crime, in particular homicides. However, other authors have found contradicting results, with some studies finding that these results only hold in the short term. This could be driven by measurement error in income inequality. In this paper, we address the issue of measurement error in inequality using the relationship between migration and inequality. Using rainfall shocks and changes in transportation costs as exogenous sources of out migration from rural areas in Brazil between 1980 and 2000, we show how migration from rural areas affects income inequality in urban areas. We find not only that there is a negative and statistically significant relationship between inequality and crime in Brazil, and that this effects are much larger than previously thought, but also that this relationship holds in the long term.
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