Does Education Reduce Crime? Reexamining the Socioeconomic Determinants of Crime in Aceh, Indonesia

Abstract

Crime remains a critical socioeconomic issue in developing regions, where structural inequalities, labor market constraints, and institutional factors interact to shape criminal behavior. In Indonesia, particularly in Aceh Province, crime rates remain relatively high despite ongoing efforts to reduce poverty and expand education. Existing literature often assumes that poverty increases crime and that education reduces it; however, empirical findings remain inconsistent and context dependent. Moreover, prior studies tend to analyze these determinants separately and rely on static models, limiting their ability to capture dynamic interactions and endogeneity. This study addresses these gaps by examining the dynamic effects of poverty and education on crime, with unemployment included as a control variable. The study employs quarterly panel data from 23 districts and cities in Aceh Province over the period 2019 to 2023. It applies a dynamic panel estimation using the First-Difference Generalized Method of Moments. The results indicate that poverty has a negative and significant effect on crime, suggesting that economic deprivation alone does not directly increase criminal activity in this context. In contrast, education shows a positive, significant relationship with crime, reflecting a mismatch between educational attainment and labor-market opportunities. Unemployment has a strong positive effect on crime, indicating that labor market conditions play a dominant role in shaping criminal behavior. The findings highlight that crime dynamics in Aceh are driven more by structural and institutional factors than by poverty alone. This study concludes that effective crime reduction requires integrated policies that align education with employment opportunities and strengthen labor-market absorption, while maintaining social cohesion.