Drug-related violence in Mexico and its effects on employment

Roberto Coronado () and Eduardo Saucedo ()
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Roberto Coronado: Federal Reserve Bank of Dallas, El Paso
Eduardo Saucedo: Tecnológico de Monterrey

Empirical Economics, 2019, vol. 57, issue 2, No 12, 653-681

Abstract: Abstract This paper examines the effects of drug-related crimes on employment in Mexico at the state level during the period 2005–2014. Results indicate that such crimes have a negative impact on employment. We are able to decompose employment into low-skilled and high-skilled employment, and results are heterogeneous among both types of employment. Results indicate that a 10% increase in drug-related crimes reduces total employment up to 0.9%. Additionally, our empirical findings indicate that high-skilled employment is more sensitive to an increase in drug-related violence than low-skilled employment. Low-skilled employment decreases up to 0.3%, while skilled employment declines up to 1.5% when drug-related violence increases by 10%. It is also found that skilled employment responds at an increasing rate when drug violence skyrockets. We also find that a rise in drug-related crimes increases wages as a mechanism to retain jobs in violent places.

Keywords: Employment; Education attainment; Mexico; Panel data; Violence (search for similar items in EconPapers)
JEL-codes: C23 F21 H56 J21 J61 J62 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00181-018-1458-z

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