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The Violent Consequences of Trade-Induced Worker Displacement in Mexico

Melissa Dell, Benjamin Feigenberg and Kensuke Teshima

American Economic Review: Insights, 2019, vol. 1, issue 1, 43-58

Abstract: Mexican manufacturing job loss induced by competition with China increases cocaine trafficking and violence, particularly in municipalities with transnational criminal organizations. When it becomes more lucrative to traffic drugs because changes in local labor markets lower the opportunity cost of criminal employment, criminal organizations plausibly fight to gain control. The evidence supports a Becker-style model in which the elasticity between legitimate and criminal employment is particularly high where criminal organizations lower illicit job search costs, where the drug trade implies higher pecuniary returns to violent crime, and where unemployment disproportionately affects low-skilled men.

JEL-codes: F16 J24 J64 K42 L60 O15 R23 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aeri.20180063
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