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Job Loss, Credit and Crime in Colombia

Author

Listed:
  • Gaurav Khanna
  • Carlos Medina

    (Banco de la República de Colombia)

  • 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 novel matched employer-employee-crime dataset in Medellín, Colombia. Job displacement leads to immediate earnings losses, and an increased likelihood of being arrested for both the displaced worker and for other youth in the family. We leverage variation in opportunities for legitimate reemployment and access to consumption credit to investigate the mechanisms underlying this job loss-crime relationship. Workers in booming sectors with more opportunities for legitimate reemployment exhibit lower increases in arrests after job losses. Greater exposure to an expansion in consumption credit also lowers the increase in arrests after employment shocks. **** RESUMEN: Se estiman los efectos de la pérdida del empleo como resultado de un despido masivo, sobre la probabilidad de ser arrestado, utilizando una novedosa base que parea datos de empleados, empleadores y arrestos en Medellín, Colombia. La pérdida del empleo genera una reducción inmediata en los ingresos, y un incremento en la probabilidad de ser arrestado tanto para el empleado despedido, como para otros familiares jóvenes. Nosotros explotamos la variación en las oportunidades de re-emplearse formalmente y en el acceso a crédito formal de consumo, para estudiar los mecanismos detrás de la relación entre la pérdida del empleo y el crimen. Los trabajadores en sectores en auge, con mayores oportunidades de re-emplearse, ven menos afectada su probabilidad de ser arrestados. Una mayor exposición a una expansión en la oferta de crédito de consumo también debilita la respuesta de los arrestos al choque en el mercado laboral.

Suggested Citation

  • Gaurav Khanna & Carlos Medina & Anant Nyshadham & Christian Posso & Jorge Tamayo, 2019. "Job Loss, Credit and Crime in Colombia," Borradores de Economia 1095, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:1095
    DOI: https://doi.org/10.32468/be.1095
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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

    Keywords

    Job displacements; crime; Medellín; Pérdida del empleo; crimen; Medellín;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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