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Internal Migration and Drug Violence in Mexico

Author

Listed:
  • Aldeco Leo Lorenzo Rodrigo
  • Jurado Jose A.
  • Ramírez-Álvarez Aurora A.

Abstract

This document studies the effect of the homicide rate on internal migration in Mexico. Reduced form evidence shows that net migration of skilled workers decreases into local labor markets where homicide rates increased after 2007, suggesting workers prefer destinations with lower homicide rates. This result is due to lower inflows, without effects on outflows, pointing to the existence of moving costs. To quantify the welfare cost of increasing homicides, we use workers' migration decisions and a spatial equilibrium model. Skilled workers' average willingness to pay to decrease the homicide rate by 1% is estimated at 0.58% of wages. The welfare cost is in the order of several points of GDP per year, depending on the assumptions. Workers who do not migrate bear the largest share of the overall welfare cost.

Suggested Citation

  • Aldeco Leo Lorenzo Rodrigo & Jurado Jose A. & Ramírez-Álvarez Aurora A., 2022. "Internal Migration and Drug Violence in Mexico," Working Papers 2022-11, Banco de México.
    • Handle: RePEc:bdm:wpaper:2022-11
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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7BE1680F86-7806-09EF-76B9-AD187924E072%7D.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Internal Migration; Homicide Rates; Instrumental Variables; StructuralEstimation;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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