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Is crime in Mexico a disamenity? Evidence from hedonic valuation approach

Author

Listed:
  • Hector Nunhez

    (CIDE Mexico)

  • Dusan Paredes

    (Departamento de Economia, Universidad Catolica del Norte)

  • Rafael Gardunho

    (CIDE Mexico)

Abstract

Since Roback (1982)’s seminal work, the literature has evaluated the role of the amenities to equilibrate the regional differentials of nominal wages and prices. While these studies generally find evidence for traditional amenities and disamenities in developed countries, it still exists a scarce exploration on how those characteristics assessed, like violence, affect the equilibrium in less developed countries. In this paper, we explore violence as amenity or disamenity for the case of Mexico as a particular and unique natural experiment. We use the hedonic wage and rent theory proposed by Roback using data from the Mexican Household Income and Expenditure Survey, along with other information at municipal and state level. For our particular hypothesis, we find evidence to support that inhabitants in traditional drug trafficking states could consider drug-related crime as an amenity.

Suggested Citation

  • Hector Nunhez & Dusan Paredes & Rafael Gardunho, 2015. "Is crime in Mexico a disamenity? Evidence from hedonic valuation approach," Documentos de Trabajo en Economia y Ciencia Regional 67, Universidad Catolica del Norte, Chile, Department of Economics, revised Sep 2015.
    • Handle: RePEc:cat:dtecon:dt201512
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    More about this item

    Keywords

    Hedonic Valuation; Wages; Rents; Amenities; Crime; Mexico;
    All these keywords.

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • H4 - Public Economics - - Publicly Provided Goods
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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