On the Distributed Costs of Drug-Related Homicides - Working Paper 364

Nicholas Ajzenman
Authors registered in the RePEc Author Service: Nicolas Ajzenman, Sebastian Galiani and Enrique Seira

No 364, Working Papers from Center for Global Development

Abstract: Reliable estimates of the effects of violence on economic outcomes are scarce. We exploit the manyfold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on house prices. We use an unusually rich dataset that provides national coverage on house prices and homicides and exploit within-municipality variations. We find that the impact of violence on housing prices is borne entirely by the poor sectors of the population. An increase in homicides equivalent to one standard deviation leads to a 3% decrease in the price of low-income housing. In spite of this large burden on the poor, the willingness to pay in order to reverse the increase in drug-related crime is not high. We estimate it to be approximately 0.1% of Mexico’s GDP.

Keywords: drug-related homicides; costs of crime; poverty (search for similar items in EconPapers)
JEL-codes: I3 K4 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2014-05
New Economics Papers: this item is included in nep-law and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cgd:wpaper:364

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