Unemployment, Inequality and Crime: Latin American Cities under Neoliberal Policies

Crime rates in Latin American cities are generally very high. This possibly makes general equilibrium analyses more appropriate than partial equilibrium ones. But there is also diversity between and within cities. Regardless of whether the role of deterrence or those of poverty and inequality are emphasised as causes of crime, the use of aggregate data in statistical work may provoke serious unobserved heterogeneity biases. A theoretical model is illustrated with econometric examples. Diversity, divisiveness and heterogeneity may also affect future trends, including further vigilantism, official or semi-official violence, segmentation, privatisation and 'medievalisation'. The discussion is completed by some ideas as to the possibility that Latin America's present may be an accurate prophecy for Europe's future.