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Income inequality and violent crime : evidence from Mexico's drug war

Author

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  • Enamorado, Ted
  • Lopez-Calva , Luis-Felipe
  • Rodriguez-Castelan, Carlos
  • Winkler, Hernan

Abstract

The relationship between income inequality and crime has attracted the interest of many researchers, but little convincing evidence exists on the causal effect of inequality on crime in developing countries. This paper estimates this effect in a unique context: Mexico's Drug War. The analysis takes advantage of a unique data set containing inequality and crime statistics for more than 2,000 Mexican municipalities covering a period of 20 years. Using an instrumental variable for inequality that tackles problems of reverse causality and omitted variable bias, this paper finds that an increment of one point in the Gini coefficient translates into an increase of more than 10 drug-related homicides per 100,000 inhabitants between 2006 and 2010. There are no significant effects before 2005. The fact that the effect was found during Mexico's Drug War and not before is likely because the cost of crime decreased with the proliferation of gangs (facilitating access to knowledge and logistics, lowering the marginal cost of criminal behavior), which, combined with rising inequality, increased the expected net benefit from criminal acts after 2005.

Suggested Citation

  • Enamorado, Ted & Lopez-Calva , Luis-Felipe & Rodriguez-Castelan, Carlos & Winkler, Hernan, 2014. "Income inequality and violent crime : evidence from Mexico's drug war," Policy Research Working Paper Series 6935, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6935
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    References listed on IDEAS

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    Cited by:

    1. Artuc,Erhan & Christiaensen,Luc & Winkler,Hernan Jorge, 2019. "Does Automation in Rich Countries Hurt Developing Ones? : Evidence from the U.S. and Mexico," Policy Research Working Paper Series 8741, The World Bank.
    2. Hector M. Nuñez & Dusan Paredes & Rafael Garduño-Rivera, 2017. "Is crime in Mexico a disamenity? Evidence from a hedonic valuation approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(1), pages 171-187, July.
    3. Heesemann, Esther & Yakubenko, Slava, 2019. "When crime hits communities: A story of fear and depression," Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203612, Verein für Socialpolitik / German Economic Association.
    4. repec:eee:jeborg:v:150:y:2018:i:c:p:28-42 is not listed on IDEAS
    5. Rashada, Ahmed Shoukry & Sharaf, Mesbah Fathy, 2016. "Income inequality and intimate partner violence against women: Evidence from India," Frankfurt School - Working Paper Series 222, Frankfurt School of Finance and Management.
    6. Jianfeng Yao and Fafanyo Asiseh, 2019. "An Economic Analysis of Household Income Inequality and BMI in China," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 44(1), pages 23-37, March.
    7. Li, Jing & Wan, Guanghua & Wang, Chen & Zhang, Xueliang, 2019. "Which indicator of income distribution explains crime better? Evidence from China," China Economic Review, Elsevier, vol. 54(C), pages 51-72.
    8. repec:ebl:ecbull:eb-18-00121 is not listed on IDEAS
    9. Germá-Bel & Maximilian Holst, 2016. "“A two-Sided coin: Disentangling the economic effects of the 'War on drugs' in Mexico”," IREA Working Papers 201611, University of Barcelona, Research Institute of Applied Economics, revised Apr 2016.
    10. Luis Raúl Rodríguez-Reyes, 2018. "A Model of the Indirect Effect of Crime on the Demand for Money," Remef - The Mexican Journal of Economics and Finance, Instituto Mexicano de Ejecutivos de Finanzas. Remef, vol. 13(4), pages 571-584, Octubre-D.
    11. Saqib Amin & Nawaz Ahmad, 2018. "Ethnic Diversity, Social Exclusion and Economic Determinants of Crimes: A Case Study of Pakistan," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(1), pages 267-286, November.
    12. Rashad, Ahmed & Sharaf, Mesbah, 2017. "Income Inequality and Violence Against Women: Evidence from India," Working Papers 2017-13, University of Alberta, Department of Economics.
    13. Camille Laville, 2018. "The econometrical causal analysis of internal conflicts: The evolutions of a growing literature
      [L’analyse économétrique des conflits internes par l’approche causale : les évolutions d’une littérat
      ," Working Papers hal-01940461, HAL.
    14. repec:eee:jcecon:v:46:y:2018:i:2:p:544-567 is not listed on IDEAS
    15. repec:kap:reveho:v:17:y:2019:i:2:d:10.1007_s11150-018-9418-0 is not listed on IDEAS
    16. repec:spr:laecrv:v:27:y:2018:i:1:d:10.1186_s40503-018-0058-9 is not listed on IDEAS
    17. repec:pal:eurjdr:v:31:y:2019:i:4:d:10.1057_s41287-018-0187-7 is not listed on IDEAS

    More about this item

    Keywords

    Rural Poverty Reduction; Crime and Society; Inequality; Gender and Law; Services&Transfers to Poor;

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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