IDEAS home Printed from
   My bibliography  Save this article

The Violent Consequences of Trade-Induced Worker Displacement in Mexico


  • Melissa Dell
  • Benjamin Feigenberg
  • Kensuke Teshima


Mexican manufacturing job loss induced by competition with China increases cocaine trafficking and violence, particularly in municipalities with transnational criminal organizations. When it becomes more lucrative to traffic drugs because changes in local labor markets lower the opportunity cost of criminal employment, criminal organizations plausibly fight to gain control. The evidence supports a Becker-style model in which the elasticity between legitimate and criminal employment is particularly high where criminal organizations lower illicit job search costs, where the drug trade implies higher pecuniary returns to violent crime, and where unemployment disproportionately affects low-skilled men.

Suggested Citation

  • Melissa Dell & Benjamin Feigenberg & Kensuke Teshima, 2019. "The Violent Consequences of Trade-Induced Worker Displacement in Mexico," American Economic Review: Insights, American Economic Association, vol. 1(1), pages 43-58, June.
  • Handle: RePEc:aea:aerins:v:1:y:2019:i:1:p:43-58
    Note: DOI: 10.1257/aeri.20180063

    Download full text from publisher

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

    References listed on IDEAS

    1. Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 87-117.
    2. Iacovone, Leonardo & Rauch, Ferdinand & Winters, L. Alan, 2013. "Trade as an engine of creative destruction: Mexican experience with Chinese competition," Journal of International Economics, Elsevier, vol. 89(2), pages 379-392.
    3. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    4. Majlesi, Kaveh & Narciso, Gaia, 2018. "International import competition and the decision to migrate: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 132(C), pages 75-87.
    5. Yoichi Sugita & Kensuke Teshima & Enrique Seira, 2023. "Assortative Matching of Exporters and Importers," The Review of Economics and Statistics, MIT Press, vol. 105(6), pages 1544-1561, November.
    6. Chiquiar, Daniel & Covarrubias, Enrique & Salcedo, Alejandrina, 2016. "Labor market consequences of trade openness and competition in foreign markets," Conference papers 332760, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Oeindrila Dube & Omar García-Ponce & Kevin Thom, 2016. "From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1181-1224.
    8. Rafael Dix-Carneiro & Rodrigo R. Soares & Gabriel Ulyssea, 2018. "Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization," American Economic Journal: Applied Economics, American Economic Association, vol. 10(4), pages 158-195, October.
    9. Oeindrila Dube & Omar García-Ponce & Kevin Thom, 2016. "From Maize To Haze: Agricultural Shocks And The Growth Of The Mexican Drug Sector," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1181-1224, October.
    10. Philip Keefer & Norman Loayza, 2010. "Innocent Bystanders : Developing Countries and the War on Drugs," World Bank Publications - Books, The World Bank Group, number 2420, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raymond Robertson & Timothy J. Halliday & Sindhu Vasireddy, 2020. "Labour market adjustment to third‐party competition: Evidence from Mexico," The World Economy, Wiley Blackwell, vol. 43(7), pages 1977-2006, July.
    2. Fernández Guerrico, Sofía, 2021. "The effects of trade-induced worker displacement on health and mortality in Mexico," Journal of Health Economics, Elsevier, vol. 80(C).
    3. Sónia Cabral & Pedro S. Martins & João Pereira dos Santos & Mariana Tavares, 2021. "Collateral Damage? Labour Market Effects of Competing with China—at Home and Abroad," Economica, London School of Economics and Political Science, vol. 88(350), pages 570-600, April.
    4. Sofía Fernández Guerrico, 2023. "Trade Shocks, Population Growth, and Migration," ULB Institutional Repository 2013/357236, ULB -- Universite Libre de Bruxelles.
    5. Connolly, Laura, 2022. "The effects of a trade shock on gender-specific labor market outcomes in Brazil," Labour Economics, Elsevier, vol. 74(C).
    6. Dias, Lucas Cardoso Corrêa & Cícero, Vinicius Curti, 2024. "Donkey business: trade, resource exploitation, crime and violence in a contestable market," OSF Preprints qreum, Center for Open Science.
    7. Akira Sasahara, 2022. "The Empirics of the China Trade Shock: A Summary of Estimation Methods and A Literature Review," Keio-IES Discussion Paper Series 2022-008, Institute for Economics Studies, Keio University.
    8. Huiyao Chen & Changyuan Luo & Mary-Françoise Renard & Shiyi Sun, 2021. "EU-China Trade and intra-EU Trade: Substitute or Complementary?," Working Papers hal-03467473, HAL.
    9. De Lyon, Josh & Pessoa, Joao Paulo, 2021. "Worker and firm responses to trade shocks: The UK-China case," European Economic Review, Elsevier, vol. 133(C).
    10. Ujjayant Chakravorty & Runjuan Liu & Ruotao Tang, 2017. "Firm Innovation under Import Competition from Low-Wage Countries," CESifo Working Paper Series 6569, CESifo.
    11. Majlesi, Kaveh, 2016. "Labor market opportunities and women's decision making power within households," Journal of Development Economics, Elsevier, vol. 119(C), pages 34-47.
    12. Pierce, Justin R. & Schott, Peter K., 2018. "Investment responses to trade liberalization: Evidence from U.S. industries and establishments," Journal of International Economics, Elsevier, vol. 115(C), pages 203-222.
    13. Benjamin Gampfer & Ingo Geishecker, 2019. "Chinese competition: intra-industry and intra-firm adaptation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(2), pages 327-352, May.
    14. Alexandra Sotiriou & Andrés Rodríguez-Pose, 2021. "Chinese vs. US Trade in an Emerging Country: The Impact of Trade Openness in Chile," Journal of Development Studies, Taylor & Francis Journals, vol. 57(12), pages 2095-2111, December.
    15. Eduardo Ferraz & Rodrigo Soares & Juan Vargas, 2022. "Unbundling the relationship between economic shocks and crime," Chapters, in: Paolo Buonanno & Paolo Vanin & Juan Vargas (ed.), A Modern Guide to the Economics of Crime, chapter 8, pages 184-204, Edward Elgar Publishing.
    16. Chakraborty, Pavel & Henry, Michael, 2019. "Chinese competition and product variety of Indian firms," Journal of Comparative Economics, Elsevier, vol. 47(2), pages 367-395.
    17. Amiti, Mary & Dai, Mi & Feenstra, Robert & Romalis, John, 2017. "How Did China's WTO Entry Benefit U.S. Consumers?," CEPR Discussion Papers 12076, C.E.P.R. Discussion Papers.
    18. Patrick Bennett & Amine Ouazad, 2020. "Job Displacement, Unemployment, and Crime: Evidence from Danish Microdata and Reforms [The Link between Human Capital, Mass Layoffs, and Firm Deaths]," Journal of the European Economic Association, European Economic Association, vol. 18(5), pages 2182-2220.
    19. Zhi, Yan & Bao, Di & Luo, Changyuan, 2019. "The China effect: Evidence from data at firm level in Thailand," Economic Systems, Elsevier, vol. 43(2), pages 1-1.
    20. Costa, Francisco & Garred, Jason & Pessoa, João Paulo, 2016. "Winners and losers from a commodities-for-manufactures trade boom," Journal of International Economics, Elsevier, vol. 102(C), pages 50-69.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aerins:v:1:y:2019:i:1:p:43-58. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.