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 un...

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Bibliographic Details
Main Authors:	Enamorado, Ted, López-Calva, Luis-Felipe, Rodriguez Castelan, Carlos, Winkler, Hernán
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
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 http://hdl.handle.net/10986/18825

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Summary:	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.

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

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