Income mobility and crime: a hierarchical cluster analysis on principal components for 27 OECD countries

Abstract

Purpose – The aim of this paper is to investigate the linkages between intergenerational income mobility and crime for 27 OECD countries, considering different types of crime, family ties, enforcement, in terms of punishment rate and perceived quality of the legal system, redistributive outcomes and government expenditure. Design/methodology/approach – Using the Global Database of Intergenerational Mobility (GDIM), the empirical analysis is conducted by coupling the principal components analysis with the hierarchical clustering. The variance tests verify the robustness of the clusters. Findings – Income mobility is higher in those countries where there is high public investment devoted to education and high perception of rule of law to buffer the adverse effects of crime on income mobility. The redistributive policies must be oriented to better the wealth distribution and not only income equality opportunity to decrease crime and to increase income mobility. A plausible existence of “hidden” income mobility emerges from the linkages between income mobility and frauds. Social implications – More redistributive policies for education, income and wealth equality should be applied in those countries with low income mobility and high violent crime rates; higher punishment rates should be applied to reduce the rates of thefts and frauds in high income mobility countries. Originality/value – The main contribution is the identification of what type of crime leads to downward income mobility, as well as the role of perceived quality of the legal system, government and family ties in the association between income mobility and crime, suggesting also the potential existence of “hidden” income mobility.