Abstract

We examine whether and how intergovernmental fiscal transfers reduce crime, an important but understudied aspect of distributive politics. Estimating the causal effect of redistribution on crime is complicated by the problem of simultaneity: transfers may be targeted precisely where crime is a problem. Our research design takes advantage of municipality-level panel data from Japan spanning a major electoral system reform that reduced the level of malapportionment across districts. This provides an opportunity to use the change in malapportionment as an instrumental variable (IV), as malapportionment affects redistribution outcomes, but the change caused by the reform is orthogonal to local crime rates. Naïve OLS estimates show negligible (near zero) effects of transfers on crime, whereas the IV results reveal larger negative effects. This finding supports the argument that redistribution can reduce crime, and introduces a new perspective on the relationship between Japan’s well-known pattern of distributive politics and its comparatively low crime rates.