Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia

58 Pages Posted: 3 Sep 2019 Last revised: 7 Aug 2021

See all articles by Gaurav Khanna

Gaurav Khanna

University of California, San Diego (UCSD)

Carlos Medina

Central Bank of Colombia

Anant Nyshadham

Boston College - Department of Economics

Jorge Tamayo

Harvard University - Business School (HBS)

Date Written: August 2019

Abstract

Canonical models of crime emphasize economic incentives. Yet, causal evidence of sorting into criminal occupations in response to individual-level variation in incentives is limited. We link administrative socioeconomic microdata with the universe of arrests in MedellĂ­n over a decade. We exploit exogenous variation in formal-sector employment around a socioeconomic-score cutoff, below which individuals receive benefits if not formally employed, to test whether a higher cost to formal-sector employment induces crime. Regression discontinuity estimates show this policy generated reductions in formal-sector employment and a corresponding spike in organized crime, but no effects on crimes of impulse or opportunity.

Suggested Citation

Khanna, Gaurav and Medina, Carlos and Nyshadham, Anant and Tamayo, Jorge A., Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia (August 2019). NBER Working Paper No. w26203, Available at SSRN: https://ssrn.com/abstract=3446513

Gaurav Khanna (Contact Author)

University of California, San Diego (UCSD) ( email )

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HOME PAGE: http://www.econgaurav.com

Carlos Medina

Central Bank of Colombia ( email )

Carrera 7 #14-78
3551 de Bogotá
Colombia

Anant Nyshadham

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Jorge A. Tamayo

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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