Poverty and Crime: Evidence from Rainfall and Trade Shocks in India
Harvard Business School - Business, Government and the International Economy Unit
Petia B. Topalova
International Monetary Fund (IMF)
April 2, 2014
Harvard Business School BGIE Unit Working Paper No. 14-067
Does poverty lead to crime? We shed light on this question using two independent and exogenous shocks to household income in rural India: the dramatic reduction in import tariffs in the early 1990s and rainfall variations. We find that trade shocks, previously shown to raise relative poverty, also increased the incidence of violent crimes and property crimes. The relationship between trade shocks and crime is similar to the observed relationship between rainfall shocks and crime. Our results thus identify a causal effect of poverty on crime. They also lend credence to a large literature on the effects of weather shocks on crime and conflict, which has usually assumed that the income channel is the most relevant one.
Number of Pages in PDF File: 43
Keywords: Rainfall, Weather, Crime, Trade Liberalization, India
JEL Classification: D74, F63, I38, Q34, Q56working papers series
Date posted: April 3, 2014
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