Income Inequality and Violent Crime : Evidence from Mexico's Drug War

The relationship between income inequality and crime has attracted the interest of many researchers, but little convincing evidence exists on the causal effect of inequality on crime in developing countries. This paper estimates this effect in a unique context: Mexico's Drug War. The analysis takes advantage of a unique data set containing inequality and crime statistics for more than 2,000 Mexican municipalities covering a period of 20 years. Using an instrumental variable for inequality that tackles problems of reverse causality and omitted variable bias, this paper finds that an increment of one point in the Gini coefficient translates into an increase of more than 10 drug-related homicides per 100,000 inhabitants between 2006 and 2010. There are no significant effects before 2005. The fact that the effect was found during Mexico's Drug War and not before is likely because the cost of crime decreased with the proliferation of gangs (facilitating access to knowledge and logistics, lowering the marginal cost of criminal behavior), which, combined with rising inequality, increased the expected net benefit from criminal acts after 2005.

Bibliographic Details

Main Authors:	Enamorado, Ted, López-Calva, Luis-Felipe, Rodriguez Castelan, Carlos, Winkler, Hernán
Language:	English en_US
Published:	World Bank, Washington, DC 2014-06
Subjects:	ASSET POVERTY, BURGLARY, CONFLICT, CONVICTION, COUNTERFACTUAL, COUNTRY LEVEL, CRIME RATE, CRIME RATES, CRIME STATISTICS, CRIMINAL, CRIMINAL ACTIVITIES, CRIMINAL ACTIVITY, CRIMINAL ACTS, CRIMINAL BEHAVIOR, CRIMINAL JUSTICE, CRIMINOLOGY, CROSS-COUNTRY ANALYSIS, CROSS-COUNTRY STUDIES, CROSS-SECTIONAL DATA, DATA SET, DEATHS, DECLINING INEQUALITY, DELINQUENCY, DEPENDENT VARIABLE, DESCRIPTIVE STATISTICS, DEVELOPED ECONOMIES, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DRUG, DRUG TRAFFICKERS, DRUG TRAFFICKING, DRUGS, ECONOMETRIC MODELS, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIC REVIEW, EMPIRICAL EVIDENCE, EMPIRICAL LITERATURE, EMPIRICAL WORK, EXPLANATORY VARIABLE, FAMILY STRUCTURES, FINANCIAL CRISIS, FIREARMS, FOOD BASKET, FOOD POVERTY, FOOD POVERTY LINE, GANGS, GINI COEFFICIENT, HIGHER INEQUALITY, HOME, HOMICIDE, HOMICIDE RATE, HOMICIDE RATES, HOMICIDES, HOUSEHOLD INCOME, HOUSEHOLD PER CAPITA INCOME, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HUMAN CAPITAL, IMPACT OF INEQUALITY, IMPRISONMENT, INCOME, INCOME DIFFERENCES, INCOME DISTRIBUTION, INCOME GROWTH, INCOME INEQUALITY, INCOME POVERTY, INCOME REGRESSIONS, INCOMES, INCREASING INCOME INEQUALITY, INCREASING INEQUALITY, INEQUALITIES, INEQUALITY DATA, INEQUALITY LEVELS, INEQUALITY MEASURE, INEQUALITY MEASURES, KIDNAPPING, LABOR MARKET, LACK OF INFORMATION, LAW ENFORCEMENT, LINEAR REGRESSION, LITERACY, MARGINAL COST, MEAN INCOME, MEASUREMENT ERROR, MEDIAN INCOME, MURDER, MURDERS, NATIONAL DEFENSE, NEGATIVE CORRELATION, NEGATIVE EFFECT, NEGATIVE RELATIONSHIP, NET BENEFIT, OFFENSES, ORGANIZED CRIME, POLICY DISCUSSIONS, POLICY RESEARCH, POLITICAL ECONOMY, POOR, POOR INDIVIDUALS, POSITIVE EFFECT, POVERTY INCREASE, POVERTY MAPS, POVERTY MEASURE, POVERTY MEASUREMENT, POVERTY MEASURES, POVERTY RATES, POVERTY REDUCTION, POVERTY STATUS, PROPERTY CRIMES, PUBLIC EXPENDITURE, PUBLIC EXPENDITURES, PUBLIC SPENDING, RAPE, REAL INCOME, REFUGEES, RISING INCOME INEQUALITY, RISING INEQUALITY, RURAL, RURAL AREAS, RURAL HOUSEHOLDS, RURAL POPULATION, SIGNIFICANT EFFECT, SOCIAL CAPITAL, SOCIAL DEVELOPMENT, SOCIAL SCIENCE, SOCIAL STRUCTURE, TAXATION, THEFT, TORTURE, VICTIMS, VIOLENCE, VIOLENT CRIME, VIOLENT CRIMES, WAR, WELFARE INDICATORS, WILL,
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19705699/income-inequality-violent-crime-evidence-mexicos-drug-war https://hdl.handle.net/10986/18825
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