Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia

Gaurav Khanna, Carlos Medina, Anant Nyshadham and Jorge Tamayo ()
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Jorge Tamayo: Harvard University

Borradores de Economia from Banco de la Republica de Colombia

Abstract: Canonical models of criminal behavior highlight the importance of economic incentives and employment opportunities in determining crime (Becker, 1968). Yet, there is little causal evidence leveraging individual-level variation in support of these claims. Over a decade, we link administrative micro-data on socio-economic measures with the universe of criminal arrests in Medellin. We test whether increasing the relative costs to formal-sector employment led to more crime. We exploit plausibly exogenous variation in employment around a cutoff in the socio-economic score, below which individuals receive health care if they are not formally employed. Using a regression discontinuity design, we show that the policy had the unintended consequence of inducing a fall in formal-sector employment and a corresponding spike in organized criminal activity. There are no effects on less economically motivated crimes like those of impulse or opportunity. Our results confirm the relationship between formal employment and crime, validating models of criminal activity as a rational economic choice **** RESUMEN: Los modelos canónicos del comportamiento criminal resaltan la importancia de los incentivos económicos y las oportunidades de empleo como determinantes del crimen (Becker, 1968). A pesar de esto, existe poca evidencia causal que soporte estos modelos a nivel de individuos. Nosotros pareamos, a lo largo de una década, información socioeconómica de individuos con el censo de todos los arrestos en Medellín. Nosotros probamos si incrementar el costo relativo del empleo formal conlleva a un incremento del crimen. Se explota una variación exógena en el empleo alrededor de un corte en el puntaje socioeconómico, por debajo del cual los individuos reciben aseguramiento en salud si no están formalmente empleados. Utilizando un diseño de regresión discontinua, mostramos que la política tuvo como consecuencia inducir una reducción en el empleo formal y un correspondiente incremento en la actividad del crimen organizado. No se encuentran efectos en crímenes con una motivación económica menor como aquellos de impulso u oportunidad. Nuestros resultados confirman la relación entre empleo formal y crimen, validando los modelos que explican la actividad criminal como una decisión racional.

Keywords: Gangs; informality; Medellin; Bandas criminales; informalidad (search for similar items in EconPapers)
JEL-codes: J46 K14 K42 (search for similar items in EconPapers)
Pages: 49
Date: 2018-09
New Economics Papers: this item is included in nep-dev, nep-iue, nep-lam and nep-law
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https://doi.org/10.32468/be.1054 (application/pdf)

Related works:
Journal Article: Formal Employment and Organised Crime: Regression Discontinuity Evidence from Colombia (2023)
Working Paper: Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia (2019)
Working Paper: Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia (2019)
Working Paper: Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:1054

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