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Job Loss, Credit, and Crime in Colombia

Author

Listed:
  • Gaurav Khanna
  • Carlos Medina
  • Anant Nyshadham
  • Christian Posso
  • Jorge Tamayo

Abstract

We investigate the effects of job displacement, as a result of mass layoffs, on criminal arrests using a matched employer-employee crime dataset from Medellín, Colombia. Job displacement leads to immediate and persistent earnings losses and higher probability of arrest for both the displaced worker and family members. Leveraging a banking policy reform, we find that greater access to credit attenuates the criminal response to job loss. Impacts on arrests are pronounced for property crimes and among younger men for whom opportunities in criminal enterprises are prevalent. Taken together, our results are consistent with economic incentives contributing to criminal participation decisions after job losses.

Suggested Citation

  • Gaurav Khanna & Carlos Medina & Anant Nyshadham & Christian Posso & Jorge Tamayo, 2021. "Job Loss, Credit, and Crime in Colombia," American Economic Review: Insights, American Economic Association, vol. 3(1), pages 97-114, March.
  • Handle: RePEc:aea:aerins:v:3:y:2021:i:1:p:97-114
    DOI: 10.1257/aeri.20190547
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    1. Garg, Teevrat & McCord, Gordon C. & Montfort, Aleister, 2020. "Can Social Protection Reduce Environmental Damages?," IZA Discussion Papers 13247, Institute of Labor Economics (IZA).
    2. Diogo Britto & Paolo Pinotti & Breno Sampaio, 2020. "The Effect of Job Loss and Unemployment Insurance on Crime in Brazil," BAFFI CAREFIN Working Papers 20139, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    3. Britto, Diogo & Pinotti, Paolo & Sampaio, Breno, 2020. "The Effect of Job Loss and Unemployment Insurance on Crime in Brazil," IZA Discussion Papers 13280, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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