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Is crime in Mexico a disamenity? Evidence from a hedonic valuation approach

Hector Nuñez (), Dusan Paredes and Rafael Garduño Rivera

No DTE 594, Working papers from CIDE, División de Economía

Abstract: Since Roback (1982)’s seminal work, the literature has evaluated the role of the amenities to equilibrate the regional differentials of nominal wages and prices. While these studies generally find evidence for traditional amenities and disamenities in developed countries, it still exists a scarce exploration on how those characteristics assessed, like violence, affect the equilibrium in less developed countries. In this paper, we explore violence as amenity or disamenity for the case of Mexico as a particular and unique natural experiment. We use the hedonic wage and rent theory proposed by Roback using data from the Mexican Household Income and Expenditure Survey, along with other information at municipal and state level. For our particular hypothesis, we find evidence to support that inhabitants in traditional drug trafficking states could consider drug-related crime as an amenity.

Keywords: Hedonic Valuation; Wages; Rents; Amenities; Crime; Mexico. (search for similar items in EconPapers)
JEL-codes: D5 H4 J3 Q2 R1 R2 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-12
New Economics Papers: this item is included in nep-ure
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Journal Article: Is crime in Mexico a disamenity? Evidence from a hedonic valuation approach (2017) Downloads
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