Working Papers

The Unintended Consequences on Crime of “Pennies from Heaven”

AUTHOR(s): Montolio, Daniel
PUBLISHED: February 2016


This paper examines how an infrastructure investment policy, implemented nationwide at the local level, has affected local crime rates. This policy, developed in the wake of the global recession of 2008–09, was designed to boost local economies through job creation. Using monthly figures from the Spanish region of Catalonia’s more than 900 municipalities, the paper exploits geographic and time variation in the Spanish Ministry of Public Administration’s random approvals of local investment policies, to estimate their impact on both (un)employment and crime. The combination of difference-in-differences and IV estimates makes it possible to precisely assess both the size and timing of the policy’s impact on the local labor market and on municipal-level crime rates. While the policy apparently did not tackle the economic recession over the long run, local public finances did experience a boost over the short term, resulting in a temporary reduction in local unemployment rates (as legally required by the policy), as well as a significant drop in crime rates.

Related Research by JEL Codes:
(or click here to find research by JEL Codes)
  • The Missing Foundations of Housing Finance: Incomplete Markets, Fragmented Policies and Emerging Solutions in Guatemala
    Technical Notes
    IDB-TN-286 - September 2011

    This paper applies an analytical framework that identifies the types of market failures responsible for the underdevelopment of the housing finance system. The working hypothesis is that there is a correlation between the nature and scope of market failures, and the kind of public interventions actually implemented. Evidence seems to disprove the policy adequacy hypothesis. Nevertheless, it is enc ... (View publication)

  • Crime and Durable Goods
    Discussion Papers
    IDB-DP-541 - September 2017

    Crime and the durability of goods are strongly connected issues. However, surprisingly, they have been studied separately. This paper explores the relationship between the production of durable goods and crime from a theoretical perspective and draws important conclusions for both topics. Crime affects the consumer and producer surplus and thus the behavior of consumers, firms, the market equi ... (View publication)

  • A Framework for Estimating the Incremental Costs of Climate Change in Infrastructure
    Technical Notes
    IDB-TN-749 - February 2016

    The general objective of this study is to review the international literature and best practices to develop a methodological framework capable of quantifying the increase in investments necessary for a traditional standard of living in a world subject to climate change. This methodology is then applied to two case studies: Bolivia and Chile. In particular, the document addresses the economics of a ... (View publication)

Hello, Welcome to the IDB!

Please join our mailing list by simply entering your email below.