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Poverty and Crime: Evidence from Rainfall and Trade Shocks in India

Author

Listed:
  • Lakshmi Iyer

    () (Harvard Business School; Business, Government and the International Economy Unit)

  • Petia Topalova

    () (International Monetary Fund (IMF))

Abstract

Does poverty lead to crime? We shed light on this question using two independent and exogenous shocks to household income in rural India: the dramatic reduction in import tariffs in the early 1990s and rainfall variations. We find that trade shocks, previously shown to raise relative poverty, also increased the incidence of violent crimes and property crimes. The relationship between trade shocks and crime is similar to the observed relationship between rainfall shocks and crime. Our results thus identify a causal effect of poverty on crime. They also lend credence to a large literature on the effects of weather shocks on crime and conflict, which has usually assumed that the income channel is the most relevant one.

Suggested Citation

  • Lakshmi Iyer & Petia Topalova, 2014. "Poverty and Crime: Evidence from Rainfall and Trade Shocks in India," Harvard Business School Working Papers 14-067, Harvard Business School, revised Aug 2014.
  • Handle: RePEc:hbs:wpaper:14-067
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    References listed on IDEAS

    as
    1. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2012. "Temperature Shocks and Economic Growth: Evidence from the Last Half Century," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 66-95, July.
    2. Markus Brückner & Antonio Ciccone & Andrea Tesei, 2012. "Oil Price Shocks, Income, and Democracy," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 389-399, May.
    3. Eric V. Edmonds & Nina Pavcnik & Petia Topalova, 2010. "Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 42-75, October.
    4. Lakshmi Iyer & Anandi Mani & Prachi Mishra & Petia Topalova, 2012. "The Power of Political Voice: Women's Political Representation and Crime in India," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 165-193, October.
    5. Petia Topalova & Amit Khandelwal, 2011. "Trade Liberalization and Firm Productivity: The Case of India," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 995-1009, August.
    6. Paul Niehaus & Sandip Sukhtankar, 2013. "Corruption Dynamics: The Golden Goose Effect," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 230-269, November.
    7. Joshua D. Angrist & Adriana D. Kugler, 2008. "Rural Windfall or a New Resource Curse? Coca, Income, and Civil Conflict in Colombia," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 191-215, May.
    8. Clément Imbert & John Papp, 2015. "Labor Market Effects of Social Programs: Evidence from India's Employment Guarantee," American Economic Journal: Applied Economics, American Economic Association, vol. 7(2), pages 233-63, April.
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    Citations

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    Cited by:

    1. Feler, Leo & Senses, Mine Zeynep, 2016. "Trade Shocks and the Provision of Local Public Goods," IZA Discussion Papers 10231, Institute for the Study of Labor (IZA).
    2. repec:cbu:jrnlec:y:2017:v:4:p:204-210 is not listed on IDEAS
    3. Zhukov, Yuri M., 2016. "Trading hard hats for combat helmets: The economics of rebellion in eastern Ukraine," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 1-15.
    4. Justin R. Pierce & Peter K. Schott, 2016. "Trade Liberalization and Mortality : Evidence from U.S. Counties," Finance and Economics Discussion Series 2016-094, Board of Governors of the Federal Reserve System (U.S.).
    5. Carla Calero & Sandra V. Rozo, 2016. "The effects of youth training on risk behavior: the role of non-cognitive skills," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-27, December.
    6. Papaioannou, Kostadis J. & de Haas, Michiel, 2017. "Weather Shocks and Agricultural Commercialization in Colonial Tropical Africa: Did Cash Crops Alleviate Social Distress?," World Development, Elsevier, vol. 94(C), pages 346-365.
    7. Jorge García Hombrados, 2017. "The Lasting Effects of Natural Disasters on Property Crime: Evidence from the 2010 Chilean Earthquake," Working Paper Series 1717, Department of Economics, University of Sussex.
    8. Marshall Burke & Solomon M. Hsiang & Edward Miguel, 2015. "Climate and Conflict," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 577-617, August.
    9. Sofia Amaral & Siddhartha Bandyopadhyay & Rudra Sensarma, 2015. "Public work programmes and gender-based violence- the case of NREGA in India," Working papers 176, Indian Institute of Management Kozhikode.
    10. Flückiger, Matthias & Ludwig, Markus, 2015. "Economic shocks in the fisheries sector and maritime piracy," Journal of Development Economics, Elsevier, vol. 114(C), pages 107-125.
    11. Bonnier, Evelina & Poulsen, Jonas & Rogall, Thorsten & Stryjan, Miri, 2015. "Preparing for Genocide: Community Work in Rwanda," Working Paper Series 2015:1, Uppsala University, Department of Economics.
    12. Bonnier, Evelina & Poulsen, Jonas & Rogall, Thorsten & Stryjan, Miri, 2015. "Preparing for Genocide: Quasi-Experimental Evidence from Rwanda," SITE Working Paper Series 31, Stockholm School of Economics, Stockholm Institute of Transition Economics, revised 10 Nov 2016.
    13. Evan Herrnstadt & Erich Muehlegger, 2015. "Air Pollution and Criminal Activity: Evidence from Chicago Microdata," NBER Working Papers 21787, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Rainfall; Weather; Crime; Trade Liberalization; India;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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