Income Inequality and Violent Crime: Evidence from Mexico's Drug War

31 Pages Posted: 20 Apr 2016

See all articles by Ted Enamorado

Ted Enamorado

Princeton University, Department of Politics

Luis Felipe López-Calva

World Bank

Carlos Rodríguez-Castelán

World Bank

Hernan Winkler

World Bank

Date Written: June 1, 2014

Abstract

The relationship between income inequality and crime has attracted the interest of many researchers, but little convincing evidence exists on the causal effect of inequality on crime in developing countries. This paper estimates this effect in a unique context: Mexico's Drug War. The analysis takes advantage of a unique data set containing inequality and crime statistics for more than 2,000 Mexican municipalities covering a period of 20 years. Using an instrumental variable for inequality that tackles problems of reverse causality and omitted variable bias, this paper finds that an increment of one point in the Gini coefficient translates into an increase of more than 10 drug-related homicides per 100,000 inhabitants between 2006 and 2010. There are no significant effects before 2005. The fact that the effect was found during Mexico's Drug War and not before is likely because the cost of crime decreased with the proliferation of gangs (facilitating access to knowledge and logistics, lowering the marginal cost of criminal behavior), which, combined with rising inequality, increased the expected net benefit from criminal acts after 2005.

Keywords: Rural Poverty Reduction, Crime and Society, Inequality, Gender and Law, Services & Transfers to Poor

Suggested Citation

Enamorado, Ted and Lopez-Calva, Luis Felipe and Rodriguez-Castelan, Carlos and Winkler, Hernan Jorge, Income Inequality and Violent Crime: Evidence from Mexico's Drug War (June 1, 2014). World Bank Policy Research Working Paper No. 6935, Available at SSRN: https://ssrn.com/abstract=2458723

Ted Enamorado (Contact Author)

Princeton University, Department of Politics ( email )

Princeton, NJ
United States

Luis Felipe Lopez-Calva

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Carlos Rodriguez-Castelan

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Hernan Jorge Winkler

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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