On the Distributive Costs of Drug-Related Homicides
46 Pages Posted: 2 Dec 2013 Last revised: 25 Jan 2015
Date Written: January 24, 2015
Reliable estimates of the effects of violence on economic outcomes are scarce. 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 variation. We find that the burden of violence only affect the poor. For low-income housing, an increase in homicides equivalent to one standard deviation leads to a 3% decrease in house prices.
Keywords: Drug-related homicides, Poverty, Costs of crime
JEL Classification: K4, I3
Suggested Citation: Suggested Citation