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Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization

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Listed:
  • Rafael Dix-Carneiro
  • Rodrigo R. Soares
  • Gabriel Ulyssea

Abstract

This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor market conditions, public goods provision, and income inequality. We propose a novel framework exploiting the distinct dynamic responses of these variables to obtain bounds on the effect of labor market conditions on crime. Our results indicate that this channel accounts for 75 to 93 percent of the effect of the trade-induced shocks on crime.

Suggested Citation

  • Rafael Dix-Carneiro & Rodrigo R. Soares & Gabriel Ulyssea, 2017. "Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization," NBER Working Papers 23400, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23400 Note: DEV ITI LS
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    References listed on IDEAS

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    Cited by:

    1. Pavcnik, Nina, 2017. "The Impact of Trade on Inequality in Developing Countries," CEPR Discussion Papers 12331, C.E.P.R. Discussion Papers.
    2. Nina Pavcnik, 2017. "The Impact of Trade on Inequality in Developing Countries," NBER Working Papers 23878, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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