The good, the bad and the ugly: The socio-economic impact of drug cartels and their violence in Mexico

Roxana Gutiérrez-Romero and Monica Oviedo Leon ()
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Monica Oviedo Leon: Departament d'Economia Aplicada, Universitat Autonoma de Barcelona

Working Papers from Department of Applied Economics at Universitat Autonoma of Barcelona

Abstract: This paper assesses the impact that drug cartels and their associated violence have had on development in Mexico. For this purpose, we monitor official and media reports to identify where cartels have operated with and without drug related homicides. Using the difference-in-difference kernel matching method, we find that on the one hand, inequality declined to a large extent in areas where cartels were active without incidents of drug related homicides. On the other, poverty increased in areas that had both the lowest and the highest rates of drug related homicides. Two reasons could explain this increase in poverty. In the most violent areas the number of employers and remunerations declined in key industries, such as manufacturing. In the least violent areas poverty increased possibly due to people migrating from the more violent places.

Keywords: Drug Cartels; Violence; Poverty; Inequality; Education; Migration; Kernel matching (search for similar items in EconPapers)
JEL-codes: C26 K49 O16 O17 R59 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2014-10
New Economics Papers: this item is included in nep-law
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:uab:wprdea:wpdea1407

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