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On the Distributive Costs of Drug-Related Homicides

Listed author(s):
  • Nicolas Ajzenman

    (Harvard Kennedy School)

  • Sebastian Galiani

    (University of Maryland)

  • Enrique Seira

    (Instituto Tecnológico Autónomo de México)

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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File URL: http://www.cedlas.econo.unlp.edu.ar/wp/wp-content/uploads/doc_cedlas158.pdf
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Paper provided by CEDLAS, Universidad Nacional de La Plata in its series CEDLAS, Working Papers with number 0158.

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Length: 45 pages
Date of creation: Apr 2014
Handle: RePEc:dls:wpaper:0158
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Web page: http://cedlas.econo.unlp.edu.ar/

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  1. Steven D. Levitt, 2004. "Understanding Why Crime Fell in the 1990s: Four Factors that Explain the Decline and Six that Do Not," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 163-190, Winter.
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  11. Astorga, Luis & Shirk, David A., 2010. "Drug Trafficking Organizations and Counter-Drug Strategies in the U.S.-Mexican Context," University of California at San Diego, Center for U.S.-Mexican Studies qt8j647429, Center for U.S.-Mexican Studies, UC San Diego.
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  17. Gabriela Calderón & Gustavo Robles & Alberto Díaz-Cayeros & Beatriz Magaloni, 2015. "The Beheading of Criminal Organizations and the Dynamics of Violence in Mexico," Journal of Conflict Resolution, Peace Science Society (International), vol. 59(8), pages 1455-1485, December.
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