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Job Loss, Credit, and Crime in Colombia

Author

Listed:
  • Gaurav Khanna
  • Carlos Medina
  • Anant Nyshadham
  • Christian Posso
  • Jorge Tamayo

Abstract

We investigate the effects of job displacement, as a result of mass layoffs, on criminal arrests using a matched employer-employee crime dataset from Medellín, Colombia. Job displacement leads to immediate and persistent earnings losses and higher probability of arrest for both the displaced worker and family members. Leveraging a banking policy reform, we find that greater access to credit attenuates the criminal response to job loss. Impacts on arrests are pronounced for property crimes and among younger men for whom opportunities in criminal enterprises are prevalent. Taken together, our results are consistent with economic incentives contributing to criminal participation decisions after job losses.

Suggested Citation

  • Gaurav Khanna & Carlos Medina & Anant Nyshadham & Christian Posso & Jorge Tamayo, 2021. "Job Loss, Credit, and Crime in Colombia," American Economic Review: Insights, American Economic Association, vol. 3(1), pages 97-114, March.
    • Handle: RePEc:aea:aerins:v:3:y:2021:i:1:p:97-114
    DOI: 10.1257/aeri.20190547
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    2. Diogo G. C. Britto & Paolo Pinotti & Breno Sampaio, 2022. "The Effect of Job Loss and Unemployment Insurance on Crime in Brazil," Econometrica, Econometric Society, vol. 90(4), pages 1393-1423, July.
    3. Magaly Faride Herrera Giraldo & Carlos Giovanni González Espitia & Héctor Ochoa Díaz, 2023. "The spatial and economic relationship between labour informality and homicides in Cali, Colombia," Development Policy Review, Overseas Development Institute, vol. 41(5), September.
    4. Cellini, Stefano & Menezes, Livia & Koppensteiner, Martin Foureaux, 2022. "Maternal Displacements during Pregnancy and the Health of Newborns," IZA Discussion Papers 15155, Institute of Labor Economics (IZA).
    5. Gaurav Khanna & Carlos Medina & Anant Nyshadham & Jorge Tamayo & Nicolas Torres, 2023. "Formal Employment and Organised Crime: Regression Discontinuity Evidence from Colombia," The Economic Journal, Royal Economic Society, vol. 133(654), pages 2427-2448.
    6. Ivandić, Ria & Lassen, Anne Sophie, 2023. "Gender gaps from labor market shocks," Labour Economics, Elsevier, vol. 83(C).
    7. Ivandić, Ria & Lassen, Anne Sophie, 2023. "Gender gaps from labor market shocks," LSE Research Online Documents on Economics 119948, London School of Economics and Political Science, LSE Library.
    8. Remco van Eijkel & Sander Gerritsen & Klarita Sadiraj & Maroesjka Versantvoort, 2021. "The causal effects of employment on mental health and criminality for disabled workers," CPB Discussion Paper 425, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Grace Armijos-Bravo & Segundo Camino-Mogro, 2023. "Covid-19 Lockdown in Ecuador: Are there Gender Differences in Unemployment?," Journal of Development Studies, Taylor & Francis Journals, vol. 59(6), pages 833-853, June.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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