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No Country for Exposed Firms: Violent Crime and Business Performance Across Sectors

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  • Danilo Souza

Abstract

Firms are affected by crime either directly, through incidents such as robberies, or indirectly, through reduced foot traffic driven by fear. This paper investigates how firms of different sectors are impacted by the indirect channel. Using a triple-difference specification and data covering the universe of firms in Brazil’s most populous state, I find that the retail sector is relatively more likely to experience na increase in firm entry following a decline in local violent crime rates. Retail firms also exhibit increases in total employment and hiring. To rationalize these findings and explore potential mechanisms, I develop a theoretical model in which sectors are differentially affected by violent crime through its impact on competition and markups.

Suggested Citation

  • Danilo Souza, 2026. "No Country for Exposed Firms: Violent Crime and Business Performance Across Sectors," Working Papers, Department of Economics 2026_05, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2026wpecon5
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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