Armed conflict and unemployment in Colombia: the role of US drug interdiction policy

Manuel Pulido-Velásquez (), Alexander Alegría-Castellanos () and Christopher John Cruz ()
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Manuel Pulido-Velásquez: Grand Valley State University
Alexander Alegría-Castellanos: Pontificia Universidad Javeriana-Cali
Christopher John Cruz: Grand Valley State University

Empirical Economics, 2025, vol. 69, issue 2, No 9, 829-860

Abstract: Abstract We exploit the exogenous variation arising from the drug interdiction policy of the USA in the 1990s to estimate the impact of high-intensity conflict on unemployment in Colombia. Using the synthetic control method, we find that between 1994 and 2014, the high-intensity armed conflict raised unemployment rates in Colombia by about 4.3 percentage points, almost half of the pre-intervention average of 10 percent. When we compare the evolution of the unemployment rate of women in Colombia to that of women in other Latin American countries, the estimated impact of the high-intensity armed conflict appears to be slightly larger than when the same comparison is done for men. Our empirical exercises in this paper contribute to quantifying the welfare effects of violence and conflict via the labor market. Our findings not only suggest that the high-intensity conflict had placed Colombia’s economy at a regional disadvantage in Latin America but also highlight the welfare effects of violence which policymakers can help to mitigate.

Keywords: High-intensity conflict; Unemployment rate; Colombia; Drug interdiction; Synthetic control (search for similar items in EconPapers)
JEL-codes: D74 J6 O10 O54 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00181-025-02750-z

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