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On the Distributive Costs of Drug-Related Homicides

Author

Listed:
  • Nicolas Ajzenman

    (Harvard Kennedy School)

  • Sebastian Galiani

    (University of Maryland)

  • Enrique Seira

    () (Centro de Investigación Económica (CIE), Instituto Tecnológico Autónomo de México (ITAM))

Abstract

We are first paper to study the economic effects of drug-trafficking organization violence. 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

Suggested Citation

  • Nicolas Ajzenman & Sebastian Galiani & Enrique Seira, 2014. "On the Distributive Costs of Drug-Related Homicides," Working Papers 1405, Centro de Investigacion Economica, ITAM.
  • Handle: RePEc:cie:wpaper:1405
    as

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    File URL: http://ftp.itam.mx/pub/academico/inves/seira/14-05.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Drug-related homicides; Costs of crime; Poverty.;

    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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