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Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization

56 Pages Posted: 9 Jan 2017  

Rafael Dix-Carneiro

Duke University

Rodrigo R. Soares

Columbia University - School of International & Public Affairs (SIPA)

Gabriel Ulyssea

Institute of Applied Economic Research (IPEA)

Multiple version iconThere are 2 versions of this paper

Date Written: December 22, 2016

Abstract

 This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor market conditions, public goods provision, and income inequality. We propose a novel framework exploiting the distinct dynamic responses of these variables to obtain bounds on the effect of labor market conditions on crime. Our results indicate that this channel accounts for 75 to 93 percent of the effect of the trade-induced shocks on crime.

JEL Classification: J6, K42, F16

Suggested Citation

Dix-Carneiro, Rafael and Soares, Rodrigo R. and Ulyssea, Gabriel, Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization (December 22, 2016). Economic Research Initiatives at Duke (ERID) Working Paper No. 242. Available at SSRN: https://ssrn.com/abstract=2895107 or http://dx.doi.org/10.2139/ssrn.2895107

Rafael Dix-Carneiro (Contact Author)

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Rodrigo R. Soares

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

Gabriel Ulyssea

Institute of Applied Economic Research (IPEA) ( email )

Av. Pres. Antonio Carlos , 51 - 17 andar
Rio de Janeiro, RJ, 20020-010
Brazil
+55 21 3804 8121 (Phone)

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