On%20the%20Distributive%20Costs%20of%20Drug%2DRelated%20Homicides

Working Papers

On the Distributive Costs of Drug-Related Homicides


CODE: IDB-WP-471
AUTHOR(s): Ajzenman, Nicolas , Galiani, Sebastian , Seira, Enrique
PUBLISHED: January 2014
LANGUAGE: English
RELATED TOPICS: Microeconomics
DOWNLOAD FILE IN: English

Abstract:

There are few reliable estimates of the effects of violence on economic outcomes. This study exploits the manifold 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 housing prices. Using an unusually rich dataset that provides national coverage on housing prices and homicides and exploits within- municipality variation, the study finds that the burden of violence affects only the poor. An increase in homicides equivalent to one standard deviation leads to a 3 percent decrease in low-income housing prices. Moreover, the effect on housing prices of long-term increases in crime is 40 percent larger.

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