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Armed conflict and unemployment in Colombia: the role of US drug interdiction policy

Author

Listed:
  • Manuel Pulido-Velásquez

    (Grand Valley State University)

  • Alexander Alegría-Castellanos

    (Pontificia Universidad Javeriana-Cali)

  • Christopher John Cruz

    (Grand Valley State University)

Abstract

We exploit the exogenous variation arising from the drug interdiction policy of the USA in the 1990s to estimate the impact of high-intensity conflict on unemployment in Colombia. Using the synthetic control method, we find that between 1994 and 2014, the high-intensity armed conflict raised unemployment rates in Colombia by about 4.3 percentage points, almost half of the pre-intervention average of 10 percent. When we compare the evolution of the unemployment rate of women in Colombia to that of women in other Latin American countries, the estimated impact of the high-intensity armed conflict appears to be slightly larger than when the same comparison is done for men. Our empirical exercises in this paper contribute to quantifying the welfare effects of violence and conflict via the labor market. Our findings not only suggest that the high-intensity conflict had placed Colombia’s economy at a regional disadvantage in Latin America but also highlight the welfare effects of violence which policymakers can help to mitigate.

Suggested Citation

  • Manuel Pulido-Velásquez & Alexander Alegría-Castellanos & Christopher John Cruz, 2025. "Armed conflict and unemployment in Colombia: the role of US drug interdiction policy," Empirical Economics, Springer, vol. 69(2), pages 829-860, August.
    • Handle: RePEc:spr:empeco:v:69:y:2025:i:2:d:10.1007_s00181-025-02750-z
    DOI: 10.1007/s00181-025-02750-z
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    Keywords

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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