The Violent Consequences of Trade-Induced Worker Displacement in Mexico
American Economic Review: Insights
vol. 1,
no. 1, June 2019
(pp. 43-58)
(Complimentary)
Abstract
Mexican manufacturing job loss induced by competition with China increases cocaine trafficking and violence, particularly in municipalities with transnational criminal organizations. When it becomes more lucrative to traffic drugs because changes in local labor markets lower the opportunity cost of criminal employment, criminal organizations plausibly fight to gain control. The evidence supports a Becker-style model in which the elasticity between legitimate and criminal employment is particularly high where criminal organizations lower illicit job search costs, where the drug trade implies higher pecuniary returns to violent crime, and where unemployment disproportionately affects low-skilled men.Citation
Dell, Melissa, Benjamin Feigenberg, and Kensuke Teshima. 2019. "The Violent Consequences of Trade-Induced Worker Displacement in Mexico." American Economic Review: Insights, 1 (1): 43-58. DOI: 10.1257/aeri.20180063Additional Materials
JEL Classification
- F16 Trade and Labor Market Interactions
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J64 Unemployment: Models, Duration, Incidence, and Job Search
- K42 Illegal Behavior and the Enforcement of Law
- L60 Industry Studies: Manufacturing: General
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics