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On the Distributed Costs of Drug-Related Homicides - Working Paper 364

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  • Nicholas Ajzenman, Sebastian Galiani, and Enrique Seira

Abstract

Reliable estimates of the effects of violence on economic outcomes are scarce. We exploit the manyfold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on house prices. We use an unusually rich dataset that provides national coverage on house prices and homicides and exploit within-municipality variations. We find that the impact of violence on housing prices is borne entirely by the poor sectors of the population. An increase in homicides equivalent to one standard deviation leads to a 3% decrease in the price of low-income housing. In spite of this large burden on the poor, the willingness to pay in order to reverse the increase in drug-related crime is not high. We estimate it to be approximately 0.1% of Mexico’s GDP.

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  • Nicholas Ajzenman, Sebastian Galiani, and Enrique Seira, 2014. "On the Distributed Costs of Drug-Related Homicides - Working Paper 364," Working Papers 364, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:364
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    References listed on IDEAS

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    Cited by:

    1. Maria Micaela Sviatschi, 2018. "Making a Narco: Childhood Exposure to Illegal Labor Markets and Criminal Life Paths," Working Papers 2018-03, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..

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    More about this item

    Keywords

    drug-related homicides; costs of crime; poverty;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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