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Crime and Establishment Size: Evidence from South America

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  • Oguzoglu, Umut

    (University of Manitoba)

  • Ranasinghe, Ashantha

    (University of Manitoba)

Abstract

Establishment exposure to crime is a frequent occurrence and a major obstacle to business operation in developing economies. We present a simple theory for the frequency and severity of crime across establishment size that is validated against the data in South America. We find that high expectation of crime at the establishment- level is strongly associated with lower sales, labor and capital investment, and consistent with our theory is most evident among medium size establishments. We consider a variety of specifications that are tenable with a causal interpretation of our results. Moreover, when evaluated relative to a host of distortions emphasized in the literature, crime remains important for explaining establishment size and addressing it may be one of the more important policy reforms for spurring development in South America.

Suggested Citation

  • Oguzoglu, Umut & Ranasinghe, Ashantha, 2015. "Crime and Establishment Size: Evidence from South America," IZA Discussion Papers 9209, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9209
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    Cited by:

    1. Ranasinghe, Ashantha & Restuccia, Diego, 2018. "Financial frictions and the rule of law," Journal of Development Economics, Elsevier, vol. 134(C), pages 248-271.
    2. Pengfei Jia & King Yoong Lim, 2021. "The stabilization role of police spending in a neo‐Keynesian economy with credit market imperfections," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(1), pages 103-125, February.
    3. Mascarúa Lara Miguel A., 2022. "Imperfect Law Enforcement, Informality, and Organized Crime," Working Papers 2022-16, Banco de México.
    4. Sorin M. S. Krammer & Addisu A. Lashitew & Jonathan P. Doh & Hari Bapuji, 2023. "Income inequality, social cohesion, and crime against businesses: Evidence from a global sample of firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(2), pages 385-400, March.
    5. Ranasinghe, Ashantha, 2024. "Misallocation across establishment gender," Journal of Comparative Economics, Elsevier, vol. 52(1), pages 183-206.

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    More about this item

    Keywords

    misallocation; establishment size; crime;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • D2 - Microeconomics - - Production and Organizations

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