On the Distributive Costs of Drug-Related Homicides / Nicolás Ajzenman, Sebastian Galiani, Enrique Seira.

Format:

Book

Author/Creator:

Ajzenman, Nicolás.

Contributor:

National Bureau of Economic Research.

Galiani, Sebastian.

Seira, Enrique.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20067.

NBER working paper series no. w20067

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

This is the first paper to study the economic effects of drug-trafficking organization violence. 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.

Notes:

Print version record

April 2014.