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Poverty and Crime: Evidence from Rainfall and Trade Shocks in India

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  • Lakshmi Iyer

    ()
    (Harvard Business School; Business, Government and the International Economy Unit)

  • Petia Topalova

    ()
    (International Monetary Fund (IMF))

Abstract

Does poverty lead to crime? We shed light on this question using two independent and exogenous shocks to household income in rural India: the dramatic reduction in import tariffs in the early 1990s and rainfall variations. We find that trade shocks, previously shown to raise relative poverty, also increased the incidence of violent crimes and property crimes. The relationship between trade shocks and crime is similar to the observed relationship between rainfall shocks and crime. Our results thus identify a causal effect of poverty on crime. They also lend credence to a large literature on the effects of weather shocks on crime and conflict, which has usually assumed that the income channel is the most relevant one.

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Bibliographic Info

Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 14-067.

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Length: 43 pages
Date of creation: Apr 2014
Date of revision:
Handle: RePEc:hbs:wpaper:14-067

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Keywords: Rainfall; Weather; Crime; Trade Liberalization; India;

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  1. Oeindrila Dube & Juan F. Vargas, 2013. "Commodity Price Shocks and Civil Conflict: Evidence from Colombia," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1384-1421.
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  4. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
  5. Mani, Anandi & Iyer, Lakshmi & Mishra, Prachi & Topalova, Petia, 2011. "The Power of Political Voice: Women's Political Representation and Crime in India," CAGE Online Working Paper Series 63, Competitive Advantage in the Global Economy (CAGE).
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  7. Mehlum, Halvor & Miguel, Edward & Torvik, Ragnar, 2006. "Poverty and crime in 19th century Germany," Journal of Urban Economics, Elsevier, vol. 59(3), pages 370-388, May.
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  16. Sheetal Sekhri & Adam Storeygard, 2013. "Dowry Deaths: Consumption Smoothing in Response to Climate Variability in India," Virginia Economics Online Papers 407, University of Virginia, Department of Economics.
  17. Petia Topalova & Amit Khandelwal, 2011. "Trade Liberalization and Firm Productivity: The Case of India," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 995-1009, August.
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