Economics and Crime Rates in Indonesia

Abstract

The Indonesian economy indicates good performance but it is not followed by the decrease in crime rates. The aim of research is to find out and analyze the effects of unemployment, education, wages, and case completion rates on the crime rates in Indonesia in 2012 – 2016. This research uses the panel data using the Fixed Effect Model (FEM) with Generalized Least Square (GLS) method. The data used in this research is the secondary data collected from the Central Bureau of Statistics and the Indonesian National Police since 2012 until 2016. The data includes the open unemployment rate, the school enrollment rates, the provincial minimum wages, the crime rates, and the case completion rates. The result of this research indicates that the variables of unemployment, education and case completion rates insignificantly affect on the criminal crime in Indonesia. The wages have negative and significant effect on the crime rates in Indonesia.

Full text

Jejak Vol 11 (2) (2018): 401-412, DOI: https://doi.org/10.15294/jejak.v11i2.16060
JEJAK
Journal of Economics and Policy
http://journal.unnes.ac.id/nju/index.php/jejak
Economics and Crime Rates in Indonesia
Yozi Aulia Rahman1, Affandi Dwi Prasetyo2
1,2Faculty of Economy, Universitas Negeri Semarang
Permalink/DOI: https://doi.org/10.15294/jejak.v11i2.16060
Received: April 2018; Accepted: June 2018; Published: September 2018
Abstract:
The Indonesian economy indicates good performance but it is not followed by the decrease in crime rates. The aim of
research is to find out and analyze the effects of unemployment, education, wages, and case completion rate s on the
crime rates in Indonesia in 2012 – 2016. This research uses the panel data using the Fixed Effect Model (FEM) with
Generalized Least Square (GLS) method. The data used in this research is the secondary data collected from the
Central Bureau of Statistics and the Indonesian National Police since 2012 until 2016. The data includes the open
unemployment rate, the school enrollment rates, the provincial minimum wages, the crime rates, and the case
completion rates. The result of this research indicates that the variables of unemployment, education and case
completion rates insignificantly affect on the criminal crime in Indonesia. The wages have negative and significant
effect on the crime rates in Indonesia.
Keywords: crime, unemployment, education, wages, case completion rates
How to Cite: Rahman, Y., & Prasetyo, A. (2018). Economics and Crime Rates in Indonesia. JEJAK: Jurnal Ekonomi
dan Kebijakan, 11(2), 401-412. doi:https://doi.org/10.15294/jejak.v11i2.16060
© 2018 Semarang State University. All rights reserved
 Corresponding author :
Address: Jl. Sekaran Raya, Gunungpati, Semarang
E-mail: yoziaulia@mail.unnes.ac.id
ISSN 1979-715X

402 Rahman and Prasetyo, Economics and Crime Rates in Indonesia
INTRODUCTION
Crime may occur any time and brings
bad effects on the economy or social
activities. Criminal action is an unlawful act
and is not in accordance with the rules and
norms that have been agreed upon in a
society. People opposed and tried to
eliminate criminal acts because criminal acts
create unrest in the community where
people no longer carry out their activities.
Criminologists assumed that a crime that
must be explained by looking at the
structural conditions in society in the
context of inequality of power, authority, and
prosperity and its relation to various
economic and political changes in society
(Santoso, 2001). Organized crime uses
political violence to influence politics in all
over the world (Daniele and Marani, 2017).
Organized crime is very detrimental to
investment and business activities (Ashby
and Ramos, 2013). Business support policies
to foster employment and productivity
(Barone and Narciso, 2011). Crimes and
violence imply people’s welfare, such as a
decrease in quality and quantity of life,
including the increase in the government or
private spending to prevent from crime
actions. The other impacts are as follows: it is
potential to damage the economy growth, to
decrease the productivity, and to obstruct
the planning (Soares, 2015).
Crime is a universal problem that has
disadvantageous effects on the function and
stability in the society and preventing crimes
always becomes a big attention of public
policy in all countries due to its implication
and social-economic cost (Halicioglu, 2015).
Crime mostly occurs in developing countries
due to the low rate of people’s education and
welfare, just like what is occurring in
Indonesia.Crime essentially arises because of
the character of humans who commit crime,
poverty, employment opportunities, and
other factors that open up someone's
chances of doing evil such as the lack of
police patrols, road and environmental
conditions, population density, the value of
residents' property, patrol frequency, and
effectiveness prosecutors and judiciary
institutions (Reksohadiprodjo, 2009).
Crime is an important social pheno-
menon that have an effect to our daily life’s
in directly or indirectly (Carboni and
Detotto, 2016). Many criminal cases occur in
Indonesia, both high and medium levels.
Crime victims are not only high-income
people, but also people with middle and
lower income. They must lose their property,
be physically and mentally injured, even they
have to experienced prolonged trauma. The
offender in committing their criminal acts
are heavily influenced by economic factors,
maybe he was fired from his job or they have
small income or wage. Also they also have
low education so they don't have many
opportunities to get high-income jobs.
Basically education is very important because
it can affect individuals when entering the
labor market. someone who has a higher
level of education will have a greater
opportunity to enter the labor market. There
is also a low educational factor so that they
do not have many opportunities to get high-
income jobs. In general, crime groups are
divided into four, (1) groups of crimes against
property rights such as robbery, theft, theft,
deliberate arson, and embezzlement; (2)
groups of crimes against personal rights such
as murder, rape and persecution; (3) groups
of negative behavior in the community's view
such as gambling, prostitution and narcotics;
(4) violation groups such as riots and traffic
violations.

JEJAK Journal of Economics and Policy Vol 11 (2) (2018): 401 - 412 403
The data and indicator to measure the
crime in Indonesia can be seen from the
amount of people at risk of crime per 100,000
people. The higher the crime rate is and the
faster the period of time of the crime rate
occurs, the more unsafe people will feel due
to the crime actions (Central Bureau of
Statistics, 2018). The crime rate condition can
be seen from the crime rate indicator in table
1.
Table 1. Crime Rates in Indonesia in 2012-
2016
Year
Crime Rate
(per 100,000 people)
2012
2013
2014
2015
2016
134
140
131
140
140
Source: Central Bureau of Statistics and Indone-
sian National Police (2016)
Based on table 1 found from the Central
Bureau of Statistics in 2012-2016, the crime
rate in Indonesia is fluctuating and tends to
be increasing from 134 criminal incidents
that are risky occurring of 100,000 people in
2012 to be 140 criminal incidents that are
risky occurring of 100,000 people in 2016. The
cause of crimes can be found more deeply
through the economy approach.
Table 2. Crime Clock in Indonesia in 2012-
2016
Year
Crime Clock
(per 100,000 people)
2012
2013
2014
2015
2016
00.01’54”
00.01’32”
00.01’36”
00.01’29”
00.01’28”
Source: Central Bureau of Statistics and Indone-
sian National Police (2016)
The crime clock indicator in Indonesia
from 2012-2016 tends to decrease the time
interval of occurrence of crimes. Based on
table 2 found that crime clock in indonesia is
tend to increased every year. In 2012, crime
clock is 00.01’54” and crime clock is
decreased to 00.01’28” in 2016. A decrease in
time intervals that occur shows the intensity
of crime is increasing. Becsi’s research (1999)
indicates that crime is dominated by the
economy motives. Some variables related to
economy, such as unemployment and
personal income, are proven to significantly
affect the crime rate in America. According
to Umaru et.al (2013), there is a thought that
poor people is lazy and refuses to work hard.
And such poor people will choose crimes to
fulfill their life necessities because it is one of
the easy solutions.
According to Becker (1986), the analysis
of crime with the economy approach uses the
basic assumption that an individual makes a
decision based on his rational thought
without considering whether it is right or
wrong. He just rests on the profit and loss
that he gets from his decision making.
Committing crime is a rational decision
based on the maximum utility.
People’s limitations in having education
causes how tight the job opportunity he has,
so that it will give impact on how high the
unemployment level is. The high rate of
unemployment in an area may increase the
crime rate in that area. Becs (1999) in his
research found a positive relationship
between unemployment and crimes.
According to Ajimotokin’s research (2015),
unemployment does not give effect on the
crime rate in America. Opinions about
unemployment affecting the crime rate are
also strengthened by a research conducted
by Rodriguez (2012). Melick (2003) also
argues that historically there are two main
general thoughts about the relationship

404 Rahman and Prasetyo, Economics and Crime Rates in Indonesia
between unemployment and crime. One of
the basic ideas is an individual in order to
maintain a certain standard of living, so as
long as he becomes unemployed it will be
more likely to commit a crime.
The school enrollmentrate in 2012 – 2016
is always increasing, which means that
people’s cognition of education also
increases. In 2012 the school enrollmentrate
in Indonesia is at the rate of 66.33% and in
2016 it reaches 72.18%. According to Lochner
(2007), the education level negatively and
significantly affects the crime rate. Having
more leisure time can be an opportunity for
people to commit criminal actions. Although
the school enrollmentrate in Indonesia is
getting better, in reality the ideal education
result is hard to find, because education faces
complex problems in the level of strategy and
implementation such as the education
equalization rate among the society, the
allocation of education fund from the
government, and the limitation of education
facilities (Bustomi, 2012). Education also
promotes human capital acquisition and
expanding the tax base (Testa, 2018). Todaro
and Smith (2015) stated that demand for
education is influenced by two things, that
are the hope for a student who is more
educated to get a job with better results in
the modern sector in the future for the
students themselves and their families as
well as good education costs which is direct
or indirect which must be issued or borne by
students and their families. Whereas from
the supply side, the number of schools at the
primary, secondary, and university levels is
found more by the political process, which
often does not relate to economic criteria.
Wages or income reflect incentives in
committing crime that brings significant
negative and big impact on the crime level
itself (Machin, 2003). Based on a research
conducted by Hardianto (2009), the income
rate negatively and significantly affects the
crime rate in Indonesia, in which the low
minimum income causes the high crime rate
in the province. According to Beauchamp
(2013), the minimum income change may
affect the crimes. The increase in the mini-
mum income negatively and significantly
affects the crime rate. An empirical evidence
shows that the increase in minimum wages
has an effect on low-skilled workers to
discourage crime. Economic reasoning gives
the possibility that low labor wages can cause
a person to commit a crime. Furthermore,
the results show that crime has increased in
various types of crime, such as increased
theft, drug sales and violent crime. The
increase in crime that occurs due to a
decrease in workers' income and reduced
time to work. Wages and unemployment
have close relationship where high and low
wages will affect the amount of supply and
demand for labor which will ultimately have
an impact on the number of unemployed.
Wages are payments for physical and mental
services to workers.
The high case completion rate is
assumed as being able to make the criminal
actors wary, so that they will not reiterate
their deeds and the crime rate in the area
will decrease. Becker (1968) formulated a
supply of offense function developed from
the motivation of offenders to participate in
criminal acts. An individual chooses to
participate in a crime if the expected utility
obtained by using other time and resources
for illegal activities is greater than the same
time and resources for legal activities. Doyle
et.al. (1999) found a result that the increase
in the high case completion rate will
decrease the crime. The criminal case
completion rate in Indonesia in tends to

JEJAK Journal of Economics and Policy Vol 11 (2) (2018): 401 - 412 405
increase year by year. Based on a research
conducted by Doyle et.al.(1999), the criminal
case completion rate should be able to
decrease the crime rate in Indonesia. But in
reality the crime rate in Indonesia tends to
increase. Crimes that occur do not always
end with punishment for the perpetrators.
The higher crime cases resolved by the police
can be interpreted as the success of the
police and security institutions in maintain-
ing security in the community. The high level
of settlement of the assumed cases can deter
criminals, so that the perpetrators do not
repeat their actions and the crime rate in the
area will decrease.
The highest crime rate average is in
Central Sulawesi Province of 303 cases while
the lowest one is in Central Java with the
crime rate of 43 cases. The highest unem-
ployment level average is Aceh Province with
the unemployment level of 9.53 % while the
lowest one in NTT of 3.33 %. The highest
school enrollment rates average is Yogya-
karta Province of 82.33% while the lowest
one is Bangka Belitung Island of 64.4%.
The highest income average in Indonesia
is DKI Jakarta Province with the minimum
income of Rp 2,390,000.- while the lowest
one in East Java of Rp 940,000.-. The highest
case completion rate average is North
Sulawesi of 76 % while the lowest one is
Maluku of 31,2%. The conditions of crime,
unemployment, education, income, and case
completion rate in each province in Indo-
nesia are varying. Facing such conditions, it
is very interesting to conduct farther
research on how the development of crime
rate in Indonesia using the economy
approach is. The aim of this research is to
find out the effects of unemployment,
education, income, and case completion rate
on the crime rate in Indonesia in 2012-2016.
RESEARCH METHOD
This study used a quantitative approach,
starting from data collection, interpretation
of the data, and appearance of the results.
The dependent variable in this study is the
crime rates, the risk of being exposed to
crime per 100,000 people in general criminal
cases reported by the number of cases in
Indonesia. The Independent variables are
unemployment (UNM), education (EDU),
wages (W) and case completion rates (CLR).
Unemployment variable used open unem-
ployment rates as data proxy. Education
variables used school enrollment rates, and
wages variables used provincial minium
wages.
The data used in this research is
secondary data in panel data (pooled data)
that combines time series data period of
2012-2016 and cross section data of 31
Provinces in Indonesia. The number of
observation (n) is 155. The data obtained
comes from Statistic Indonesia (BPS) and
Indonesia National Police. The analysis
method used in this research is Generalized
Least Square (GLS) with Fixed Effect Model
(FEM) approach using the additional tool
called E-Views 9. The test gone through is
hypothesis test including determinant coeffi-
cient test, t test, and F test. The econometric
effects of unemployment, education, wages,
and case completion rate on the crime rate in
Indonesia can be analyzed using the
following equation:
CRit = β0 + β1.UNM it+ β2.EDU it +
β3.WR it + β4. CLR it + μit
In which:
CR = Crime rates
UNM = Unemployment
EDU = Education
WR = Wages

406 Rahman and Prasetyo, Economics and Crime Rates in Indonesia
CLR = Case Completion Rates
β0 = Intercept/Constanta
β1, β2, β3, β4 = Regression coefficient for each
variable
μ = error term
i = cross section (provinces)
t = time series (years)
RESULT AND DISCUSSION
In the economic view, crime can cause
inefficiency in resource allocation and distort
prices so that the amount must be
suppressed. It can be said that crime is a real
threat to security. On the other hand,
security at the national level is a requirement
to maintain the life of a country through
economic, political and defense and security
activities. So that crime analysis cannot be
separated from the reach of economics
analysis. A rationality assumption in crime
economy states that crime actors commit
their deeds based on cost profit calculation
and respond to incentives. Most crime cases
in Indonesia are dominated by the economy
motives. Based on its types, the crimes in
Indonesia in 2012-2016 can be seen in table 3
as follows.
Based on the table above, it seems that
the dominant type of crimes in Indonesia is
crimes against the right of ownership on
average of 191,511 cases. Crime against the
right of ownership is crimes of taking the
right of ownership or other people’s
property. Such a crime more dominantly
refers to the economy motives. While the
least type of crimes reported in Indonesia is
murder on average of 1.380 cases followed by
Crimes against people’s freedom and moral
crimes. The average of crime rate in
Indonesia in 2012-2016 is 186. It means that
the risk of criminal cases in Indonesia is the
occurrence of 186 criminal cases per 100,000
amounts of people.
Based on changes in crime rates
calculated based on the difference between
the end of the year and the beginning of the
year. It is known that the highest increase in
crime rates were Jambi and Gorontalo
respectively 82 and 74. While the most
drastic reduction in crime rates was Bangka
Belitung Island and Riau amounted to -273
and -94 respectively.
Unemployment is caused by a gap
between the provision of employment and
the number of workers who are looking for
work. Unemployment can also occur despite
the high number of job opportunities but
limited information, differences in basic
skills available from those needed or even
deliberately choosing to be unemployed. In
Table 3. Many Crimes based on Groups / Types of Crimes in 2012-2016
Groups / Types of Crimes
Year
Average
2012
2013
2014
2015
2016
Murder
Physical crimes
Moral crimes
Crimes against people’s freedom
Crimes against right of ownership with violence
Crimes against right of ownership
Narcotics crimes
Fraud, Embezzlement & Corruption
1.456
40.361
5.102
1.693
11.352
122.781
16.589
48.044
1.386
44.980
4,850
1.775
12.095
123.033
19.953
49.626
1.277
46.366
5.499
1.954
11.758
117.701
19.280
48.608
1.491
47.128
5.041
2.212
11.926
114.013
36.874
54.115
1.291
46.767
5.247
2.885
12.095
120.026
39.171
49.198
1.380
45.120
4.179
2.104
11.845
119.511
26.373
49.918
Source: Operation Control Bureau, Indonesia National Police (2016)

JEJAK Journal of Economics and Policy Vol 11 (2) (2018): 401 - 412 407
this research, it is used to measure unem-
ployment by using an indicator of open
unemployment rate. Provinces that show the
highest increase in open unemployment
rates are Riau and Bangka Belitung Island
with changes of 3.06 % and 2.86%. While the
provinces that showed the most drastic
decline in open unemployment rates were
South Sumatra and Jakarta, each at -13.64%
and -3.55%.
To measure the level of education in this
study using the school enrollment rates
indicator. The school enrollment rates is
obtained from the proportion of school at
certain levels of education in the age group
that matches the level of education.
Provinces with the highest school enroll-
mentrates are Yogyakarta, Aceh and Maluku
with an average school enrollment rate of
82.7%, 76.61% and 75.96%. While the
province with the lowest school enrollment
rate is Bangka Belitung Island and Papua,
with an average school enrollmentrate of
65,09%, and 64.18%.
Wages have a considerable influence on
supply and demand for labor, the change in
wages will affect the size of the supply of
labor, in accordance with the law of supply
that a high level of wages will cause an
increase in the amount of labor offered.
Various studies prove that better opportu-
nities to earn income will reduce crime.
Wages in this study are explained by regional
minimum wage indicators. Minimum wages
are defined as the lowest monthly wages
which consist of basic wages including fixed
allowances. Minimum wages have increased
every year. Provinces that show the highest
increase in minimum wages are Jakarta and
West Java with changes of Rp 1,57 milion and
Rp 1,47 milion. While the provinces that
showed the lowest increase in minimum
wages were East Java and Yogyakarta which
amounted to Rp 460.000 and Rp 430.000.
The case completion rates can be
interpreted as the percentage of cases
resolved by the police. The highest of in case
completion rates an area means that the
number of criminal cases reported by the
society in the area is increasingly being
resolved by the police. The case completion
rates illustrates the success rate of the police
in carrying out their duties to safeguard
public security. Provinces that show the
highest average of case completion rates is
Central Java with 84,27 %, followed by North
Sulawesi with 76,1 %.
The regression data of the effects of
unemployment, education, wages, and case
completion rate on the crime rate in
Indonesia in 2012-2016 with fixed effect
model and GLS method, the regression
coefficient value for each variable of research
is found with the following equation:
CR = 339,7037 + 0,121688(UNM) +
0,621489(EDU) – 2,071736(WR) –
0,015233(CLR)
Based on the data processing using
Eviews 9 software with fixed effect model
and GLS method, R2 value of 0,954804 is
found. This indicates that the variable of
crime rate (CR) can be explained by the
variables of unemployment (UNM),
education (EDU), wages (WR), and case
completion rate (CLR) of 95,48 %, while the
rest of 4,52 % is explained by other factors
except the model.
The F Test is intended to see whether
there is the joint effect of the independent
variables on the dependent ones those are
the variables of unemployment (UNM),
education (EDU), wages (WR), and case
completion rate (CLR) on the crime rate

408 Rahman and Prasetyo, Economics and Crime Rates in Indonesia
(CR). Based on the regression result of the
effect of variables of unemployment (UNM),
education (EDU), wages (WR), and case
completion rate (CLR) on the crime rate (CR)
in Indonesia in 2012-2016 using the fixed
effect model, it finds Fstatistics values of
74,56224 with probability of 0.000000. From
the result of Ftable with numerator of k-1=3
and denumerator (n-k)=151, it finds Ftable of
2,66, so Fstatistics > Ftable. Therefore, it can be
concluded that the independent variables
jointly affect the dependent variables in
Indonesia in 2012-2016.
The t statistic test aims at knowing how
far the effect of each independent variable in
individual way in explaining the dependent
variable variation. The following is the table
of t statistic test of unemployment (UNM),
education (EDU), wages (WR), and case
completion rate (CLR) on the crime rate (CR)
in Indonesia in 2012-2016.
Based on table 4, it is found that tstatistics
for the variable of unemployment (UNM) is
0,066819 with probability of 0,9648 and not
significance on significant level of 5%. At the
significant level with df = 151, it finds the ttable
value of 1.960 It can be seen that tstatistics <
ttable and it can be seen also the value of
probability of 0,9648 that is not significant at
the significant level of 5%. This indicates that
Ho is accepted. Therefore, the variable of
unemployment has no significant effect to
the crime rate in Indonesia.
The variable of education (EDU) with
tstatistics is 0,109787 with probability of 0,9128
that is significant at α = 5%. So it can be
found out that education has no significant
effect to crime rate in Indonesia. The variable
of wages with tstatistics is -2,836365 with
probability of 0.0054 and is significant at α =
5%. So it can be found out that minimum
wages have negative and significant effect to
the crime rate in Indonesia. Every increase of
1 % of minimum wages in Indonesia will
bring a decrease in crime rates of 2 cases of
crimes per 100.000 people.
The variable of case completion rate
(CLR) with tstatistics is -1,252252 with
probability of 0.2129 and insignificant at α =
5%. So it can be found out that the case
completion rate has negative and insignifi-
cant effect to crime rate in Indonesia.
Based on the analysis result, it can be
explained that the variable of unemployment
has positive and insignificant effect with
coefficient value of 0,066819 to crime rate in
Indonesia in 2012-2016. The result is not in
accordance with the theory and the previous
research that becomes the theoretical
background of this research. This research is
based on the popular perception of
unemployment effect on crimes, in which the
absence of occupation tends to cause the
crime actions. Based on a theory presented
by Becker (1968), people without any jobs
experiences a decrease or loses income that
will cause the expectation of utility of crime
actions will be bigger than the legal income
utility. The imprisonment cost in the form of
Table 4. t Statistic Test
Variables
t-Statistic
Prob
Ttabel
unemployment (UNM)
0,066819
0,9648
1.960
education (EDU)
0,109787
0,9128
1.960
wages (WR)
-2,836365
0.0054
1.960
case completion rate (CLR)
-1,252252
0.2129
1.960
Source: Data of research is processed by Eviews 9 program

JEJAK Journal of Economics and Policy Vol 11 (2) (2018): 401 - 412 409
opportunity cost of legal income that has
been lost is also so small for someone
without jobs. This causes an incentive for
someone to commit crimes. Besides, unem-
ployed people will have much leisure time,
whereas according to Becsi (1995), crime
actions are caused by much leisure time.
Based on the previous research conducted by
Kollias (2012), the unemployment level has
positive and significant effect on the crime
rate like occurring in Yunani.
Broadly speaking, the unemployment
relationship depends on the net effect
between the incentive motives of the crime
actor and the opportunity to get the
potential victim. Such a relationship is
determined by the net effect between the
Supply of Potential Offender and the Supply
of Suitable Victim (Britt, 1994). It can be
concluded that the estimation result of
research states that the net effect of the
Supply of Suitable Victim is stronger than
the Supply of Potential Offender. Based on
the perspective of opportunity of getting
potential victim, unemployment is proved to
have negative relationship with crimes. In
Indonesia, unemployment tends to be
viewed as a victim without promising
compared with a crime actor. Furthermore,
the increase in the number of unemployment
also indicates the signs of decrease in
economy. The activities of producer and
consumer also tend to be slow down both for
employed and unemployed people. The
decrease in wealth accumulation will
decrease the probability of the crime actor in
attaining target with high booty, so it will
decrease the crime rate. It is not appropriate
with the findings of Hendri (2014) at a case
study on 33 provinces in Indonesia in 2007-
2011. The result of research states that there
is a proof of significant negative relationship
between the unemployment rate and the
property crime.
Unemployment in Indonesia has no
effect on crime can occur due to several
reasons; unemployed people have more
leissure time, they prefer to wait for a
permanent job or do part-time work in order
to earn a living despite their small income.
The current government has brought in
investors who can absorb more labors, in
addition to programs on works that are very
useful for unemployed people in the village
and get daily wages as long as the project is
run. The government also provides the hope
family programs (Program Keluarga
Harapan-PKH) for the unemployed with the
aim of their economic life for the better
conditions.
Based on the analysis result, it can be
explained that the variable of education has
positive and significant effect with the
negative coefficient value of -0,109787 on the
crime rate in Indonesia in 2012-2016. This
indicates that education has insignificant
effect on the crime rate in Indonesia. The
result is not in accordance with the research
hypothesis stating that there is the negative
and significant effect of the variable of
education on the crime rate. It is based on a
research conducted by Lochner (2007) who
found that there is the negative and
significant effect of the variable of education
on the crime rate. The high education
assumes that leisure time owned by someone
will be fewer so that an opportunity to
commit a crime will decrease. Besides, the
high education level will indirectly increase
the wages attained from legal occupation, so
that it will decrease the incentives in
committing crimes. When the school
enrollment rates increases, the crime rate in
Indonesia will decrease.

412 Rahman and Prasetyo, Economics and Crime Rates in Indonesia
School enrollment rates do not have an
influence on crime rates can be explained for
several reasons; the high or low level of
education of a person does not affect the
opportunity and possibility or probablity of
committing a crime. People with low educa-
tion can commit crimes such as theft and
robbery. Highly educated people can also
commit extraordinary crimes such as corrup-
tion and large-scale fraud. They have high
level of knowledge and ability so they can
manipulate and mark-up government and
companies budgets. The corruptor arrested
by the KPK are mostly from college gra-
duates.
Based on the result of the previous
research, it is found that wages directly has
negative and significant to the crime rate in
Indonesia. The regression result of this
research indicates that the variable of wages
indicates negative value and has significant
effect with α = 5% to the crime rate in
Indonesia in 2012-2016 with the coefficient
value of -2,836365. The result is in
accordance with the theory and the previous
research that become the theoretical
background of this research.
The research hypothesis states that there
is the negative and significant effect of the
variable of wages on the crime rate. It is
based on a research conducted by Hardianto
(2009) who found that there is the significant
negative effect of the variable of wages on
the crime rate. This is strengthened by a
research conducted by Beauchamp (2013)
who found that the minimum wages change
may affect the crimes. According to him, the
increase in minimum wages negatively and
significantly affects the crime rate. The initial
assumption of the crime economy theory is
the rationality of the potential crime actors,
in which the crime action will be committed
when the crime utility is bigger than the
legal income utility. The increase in wages
will decrease the crime rate by decreasing
the expectation of the net rewards received
from the income utility of the crime rate
(Becker, 1968).
Such conditions may explain that
people’s wages are the factor affecting the
crimes positively or negatively. It has positive
relationship when the income rate is an
expectation of the booty going to find. It
explains why crimes occur in big cities with
high income level, while income has negative
effect when the crime actor is the com-
parison of the expectation of illegal and legal
sector profits, as explained in crime rational
model. Wages in Indonesia have effect on the
crime rate. But, provinces with high wages
level should have low criminality level, but
on the contrary, provinces with high wages
level such Papua with the high minimum
wages in Indonesia even have the crime rate
more than the national average of 186, in
which Papua have crime rate of 212 per
100,000 people.
Based on the analysis data, it can be
explained that the variable of case comple-
tion rate has insignificant effect with the
negative coefficient of -1,252252 against the
crime rate in Indonesia in 2012-2016. The
result is not in accordance with the research
hypothesis stating that there are the negative
and significant effects of the variable of case
solution level on the crime rate. This is based
on a research conducted by Doyle, et.al.
(1999) who found that there is the significant
negative effect of the variable of case
completion rate on the crime rates.
Based on the theory presented by Becker
(1968), the offering of crimes one of which is
affected by a probability of the arrest of the
criminal actor, in which the higher the

JEJAK Journal of Economics and Policy Vol 11 (2) (2018): 401 - 412 409
probability of the arrest will decrease the
amount of the crime committed. In this
research, probability of the arrest is found
from an indicator of case completion rate.
This research finds out that the increase in
the case completion rate of the police has not
been able to press the crime rate. When the
case completion rate increases, it indicates
the level of success of the police in solving
the reported cases. This should be someone’s
risk outlook when he will commit a crime
because the risk of being arrested will be
higher. However, this has no effects on the
crimes in Indonesia.
Such phenomena can be explained by
some reasons. Becker (1968) explained that
there are two kinds of people in committing
crimes. The first one is those who are afraid
of the risk so that they will prevent
themselves from committing crimes when
the risk level is high. The second one is those
who do not care about the risk so that they
keep committing crimes despite the risk of
being arrested in the area is high. Based on
such theory, it seems that the crime actors in
Indonesia are more dominated by those who
are not afraid of the risk when committing
crimes.
CONCLUSION
The dominant type of crimes in
Indonesia is crimes against the right of
ownership on average of 191,511 cases. Based
on the result of research above, a conclusion
can be seen that unemployment, education,
and case completion rates have insignificant
affect to the crime rates in Indonesia. That’s
findings indicates that unemployed people
prefer to wait for a permanent job or do part-
time work. Our government is always trying
to increase the amount of investment both
domestically and abroad. People with low
education and high education could
commited crimes in the different levels.
There is the serious problems in indonesian
education is lack of character dan ethics
development in every level of education. And
there is an imbalance in the case completion
rates in various regions, there are areas that
have a high level of case completion rates,
but there are also areas that have low case
completion rates. While the minimum wages
have negative and significant effect on the
crime rates in Indonesia. When the
minimum wages increase, the crime rates in
Indonesia will decreases. Minimum wages in
each region always increase every year based
on agreements between local governments,
employers and labor unions. Even though
the entrepreneurs in the beginning usually
refused because they felt that increasing the
salary did not increase worker productivity.
On average each year salaries increase by
around 5-10%, which is also due to the
pressure from inflation and increasing living
costs. International labor day moments were
used as opportunities to demand their
welfare and prosperity.
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