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Gang Crackdowns

Author

Listed:
  • Nikita Melnikov
  • Carlos Schmidt-Padilla
  • María Micaela Sviatschi

Abstract

What are the consequences of restoring state authority in territories governed by criminal organizations? Combining household surveys and administrative records with detailed maps of former gang-controlled areas, we study how El Salvador’s 2022 State of Exception, which ended two decades of gang territorial control, reshaped Salvadoran society. We find that the removal of gang control integrated previously segmented labor markets, improving mobility, employment outcomes, household income, and financial inclusion. Areas with greater pre-2022 gang exposure also experienced larger increases in business formation and property investment. However, the legacy of criminal governance persists through residence-based discrimination: employers remain less willing to hire otherwise identical applicants from former gang-controlled neighborhoods. Finally, although overall support for the crackdowns remains high, individuals who witnessed police abuse report substantially greater distrust of the police and the national government, suggesting that abuses of state authority may undermine the political sustainability of tough-on-crime policies.

Suggested Citation

  • Nikita Melnikov & Carlos Schmidt-Padilla & María Micaela Sviatschi, 2026. "Gang Crackdowns," NBER Working Papers 35866, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35866
    Note: DEV POL
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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P0 - Political Economy and Comparative Economic Systems - - General

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