Economic Inequality and Urban Growth Influencing Violent Crime: A Comparative Study of Upper-Middle-Income Countries

Abstract

This study investigates the impact of macroeconomic factors and social structural changes on violent crime, with a specific focus on income inequality, economic stability (inflation and unemployment), and urbanization. Utilizing panel data from 2011 to 2021 across 12 upper-middle-income countries (132 observations), the research employs a fixed effects model with HAC (Heteroskedasticity and Autocorrelation Consistent) robust standard errors to control for country-specific heterogeneity. The findings provide suggestive evidence of a marginally significant negative association between urbanization and homicide rates (β=-0.51, p<0.10), supporting the “protective factor” hypothesis which suggests that urban environments mitigate loss of life through superior access to public surveillance infrastructure and emergency medical services. However, no statistical significance is observed for income inequality, unemployment, or inflation; this is attributed to the model’s focus on short-term variations, whereas inequality represents a slow-changing structural issue. The study concludes that country-specific effects, including cultural context and the strength of social institutions, play a more pivotal role in determining levels of violence than short-term economic fluctuations (R²=0.96). Consequently, policy recommendations should prioritize safety-oriented urban planning alongside long-term social structural reforms for sustainable crime-prevention measures.