Cash Transfers and Violent Crime in Indonesia

Abstract

This study investigates the impact of Indonesia’s flagship conditional cash trans- fer (CCT) program—PKH—on violent crime. Exploiting data from a randomized controlled trial and administrative data from the staggered nationwide program roll-out in combination with different causal identification strategies, we show that communities receiving access to the CCT experienced an increase in violent crime. Examining possible mechanisms, our analysis reveals that the program resulted in an increase in idleness among non-targeted young men within beneficiary house- holds, which we believe contributed to the rise in violent crime. In contrast, we show that the surge in violent crime is neither related to PKH increasing the (monetary and non-monetary) rewards for committing crime nor to alternative reductions in the (material, psychic, punishment-related) costs of engaging in crimes.