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Is Murder Bad for Business? Evidence from Colombia

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  • Sandra V. Rozo

    (USC Marshall School of Business)

Abstract

This paper studies the effects of violent crime on market prices and size using plant-level panel data in Colombia. To estimate causal effects, I exploit reductions in violence driven by increases in security expenditures during à lvaro Uribe’s presidency; these resulted in greater violence reductions in municipalities that voted for him in the 2002 elections as he was looking for reelection. I find that firms that face higher violence also face lower output and input prices. Output prices fall more than the prices of inputs, which drives firms to reduce production, and some firms exit the market. Workers see reductions in their real income.

Suggested Citation

  • Sandra V. Rozo, 2018. "Is Murder Bad for Business? Evidence from Colombia," The Review of Economics and Statistics, MIT Press, vol. 100(5), pages 769-782, December.
    • Handle: RePEc:tpr:restat:v:100:y:2018:i:5:p:769-782
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    Citations

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    Cited by:

    1. Elena Cefis & Cristina Bettinelli & Alex Coad & Orietta Marsili, 2022. "Understanding firm exit: a systematic literature review," Small Business Economics, Springer, vol. 59(2), pages 423-446, August.
    2. Bernal, Carolina & Prem, Mounu & Vargas, Juan F. & Ortiz, Mónica, 2024. "Peaceful entry: Entrepreneurship dynamics during Colombia’s peace agreement," Journal of Development Economics, Elsevier, vol. 166(C).
    3. Abril, Veronica & Perez-Vincent, Santiago & Tobon, Santiago & Vanegas-Arias, Martin, 2022. "How to measure public trust in the police? A framework with an application for Colombia," SocArXiv 89shw, Center for Open Science.
    4. Hale Utar, 2018. "Firms and Labor in Times of Violence: Evidence from the Mexican Drug War," CESifo Working Paper Series 7345, CESifo.
    5. Christopher Ksoll & Rocco Macchiavello & Ameet Morjaria, 2021. "Electoral Violence and Supply Chain Disruptions in Kenya's Floriculture Industry," NBER Working Papers 29297, National Bureau of Economic Research, Inc.
    6. Gorrín, Jesús & Morales-Arilla, José & Ricca, Bernardo, 2023. "Export side effects of wars on organized crime: The case of Mexico," Journal of International Economics, Elsevier, vol. 144(C).
    7. Rozo, Sandra V. & Vargas, Juan F., 2021. "Brothers or invaders? How crisis-driven migrants shape voting behavior," Journal of Development Economics, Elsevier, vol. 150(C).
    8. Maoyong Cheng & Zhenjun Li, 2023. "Public governance and firm total factor productivity: Evidence from a quasi‐natural event in China," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(3), pages 683-719, July.
    9. Laurent Wagner, 2020. "The allocation of resources of national development banks: Does it fit development goals?," Working Papers hal-02988377, HAL.
    10. Del Prete, Davide & Di Maio, Michele & Rahman, Aminur, 2023. "Firms amid conflict: Performance, production inputs, and market competition," Journal of Development Economics, Elsevier, vol. 164(C).
    11. Laurent WAGNER, 2020. "The allocation of resources of national development banks," Working Paper 9c3d4298-95e5-4561-a9cb-5, Agence française de développement.
    12. Fe, Hao & Sanfelice, Viviane, 2022. "How bad is crime for business? Evidence from consumer behavior," Journal of Urban Economics, Elsevier, vol. 129(C).
    13. Florian Leon & Ibrahima Dosso, 2020. "Civil conflict and firm recovery: Evidence from post-electoral crisis in Côte d'Ivoire," Working Papers hal-02865559, HAL.

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