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Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia

Author

Listed:
  • Gaurav Khanna

    (University of California San Diego)

  • Carlos Medina

    (Banco de la Republica de Colombia)

  • Anant Nyshadham,

    (Boston College & NBER)

  • Jorge Tamayo

    (Harvard University. Harvard Business School,)

Abstract

Canonical models of crime emphasize economic incentives. Yet, causal evidence of sorting into criminal occupations in response to individual-level variation in incentives is limited. We link administrative socioeconomic microdata with the universe of arrests in Medellίn over a decade. We exploit exogenous variation in formal-sector employment around a socioeconomic-score cutoff, below which individuals receive benefits if not formally employed, to test whether a higher cost to formal-sector employment induces crime. Regression discontinuity estimates show this policy generated reductions in formal-sector employment and a corresponding spike in organized crime, but no effects on crimes of impulse or opportunity.

Suggested Citation

  • Gaurav Khanna & Carlos Medina & Anant Nyshadham, & Jorge Tamayo, 2019. "Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia," Empirical Studies of Conflict Project (ESOC) Working Papers 14, Empirical Studies of Conflict Project.
  • Handle: RePEc:pri:esocpu:14
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    File URL: https://esoc.princeton.edu/WP14
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    More about this item

    Keywords

    Colombia; organized crime; informality; occupational choice; gangs; Medellίn;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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