Economic inequality in Indonesia has been on the rise and recently reached a record high level of 0.41 measured in the Gini index of household consumption expenditure. Not only economically, the issue of rising inequality is also socially and politically important as it may harm societal stability, especially in large, diverse and young democracy plagued by widespread poverty and vulnerability amid rising expectations. This study finds empirical supports for the violence increasing effects of higher inequality across districts in provinces previously considered as ‘high conflict’ regions. The result is robust after controlling for province and time effects, ethnic and religious fractionalizations and series of usual determinants of violence, as well as across different measures of violence. This new evidence implies that it is important to include tackling inequality as an explicit focus in development agenda.
Key words: inequality and stability, inequality and violence, district panel, Indonesia crime.