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Violence in Mexico and its effects on labor productivity

Author

Listed:
  • René Cabral

    (Tecnológico de Monterrey)

  • André Varella Mollick

    (University of Texas Rio Grande Valley)

  • Eduardo Saucedo

    (University of Texas Rio Grande Valley)

Abstract

This paper examines the evolution of Mexico’s labor productivity (GDP per worker) across its 32 sub-national entities from 2003 to 2013, during a period of rising drug-related crimes. Using quarterly data and economic controls, fixed effects models suggest the effects of crime are small and differ depending on whether such crimes are prosecuted by state/local or federal authorities. However, results from System Generalized Methods of Moments regressions generate stronger responses for (endogenous) wages and labor productivity. First, crime has negative effects on Mexican labor productivity across states during the “war on drugs” period. Second, increases in expenditures on public security lead to falling labor productivity, which can be interpreted as indirect effects of crime. Third, federal authorities are found to be more effective (in not causing lower productivity) than state/local authorities.

Suggested Citation

  • René Cabral & André Varella Mollick & Eduardo Saucedo, 2016. "Violence in Mexico and its effects on labor productivity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 317-339, March.
    • Handle: RePEc:spr:anresc:v:56:y:2016:i:2:d:10.1007_s00168-016-0741-1
    DOI: 10.1007/s00168-016-0741-1
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    Cited by:

    1. René Cabral & André Varella Mollick & Eduardo Saucedo, 2019. "Foreign Direct Investment In Mexico, Crime, And Economic Forces," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 68-85, January.
    2. Germà Bel & Maximilian Holst, 2018. "Assessing the effects of the Mexican Drug War on economic growth: An empirical analysis," Southern Economic Journal, John Wiley & Sons, vol. 85(1), pages 276-303, July.
    3. Tello, Mario A., 2020. "Conceptualizing social impact: A geographic perspective," Journal of Business Research, Elsevier, vol. 119(C), pages 562-571.
    4. Germá-Bel & Maximilian Holst, 2016. "“A two-Sided coin: Disentangling the economic effects of the 'War on drugs' in Mexico”," IREA Working Papers 201611, University of Barcelona, Research Institute of Applied Economics, revised Apr 2016.
    5. Godwin Okafor & Obiajulu Ede, 2023. "Kidnapping rate and capital flight: Empirical evidence from developing countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2590-2606, July.
    6. Roberto Coronado & Eduardo Saucedo, 2019. "Drug-related violence in Mexico and its effects on employment," Empirical Economics, Springer, vol. 57(2), pages 653-681, August.
    7. Cabral, René & Mollick, André Varella, 2017. "Mexican real wages and the U.S. economy," Economic Modelling, Elsevier, vol. 64(C), pages 141-152.
    8. Álvarez, Antonio & Garduño, Rafael & Núñez, Héctor, 2016. "Modelling the effect of crime on economic activity: The case of Mexican states," Efficiency Series Papers 2016/01, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    9. Gregory Brock, 2020. "The real Oaxaca decomposition: convergence within Mexico’s Oaxaca region in the twenty-first century—Do types of crime and religious belief matter?," Economic Change and Restructuring, Springer, vol. 53(4), pages 543-569, November.
    10. Livia Menezes & Martin Foureaux Koppensteiner, 2023. "Victimisation and Birth Outcomes," School of Economics Discussion Papers 0723, School of Economics, University of Surrey.
    11. Cabral Torres René & Mollick André V. & Saucedo Eduardo, 2018. "The Impact of Crime and Other Economic Forces on Mexico's Foreign Direct Investment Inflows," Working Papers 2018-24, Banco de México.
    12. Eduardo Saucedo & Teofilo Ozuna & Hector Zamora, 2020. "The effect of FDI on low and high-skilled employment and wages in Mexico: a study for the manufacture and service sectors," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-15, December.

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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