Job Loss, Credit, and Crime in Colombia
American Economic Review: Insights
vol. 3,
no. 1, March 2021
(pp. 97-114)
Abstract
We investigate the effects of job displacement, as a result of mass layoffs, on criminal arrests using a matched employer-employee crime dataset from Medellín, Colombia. Job displacement leads to immediate and persistent earnings losses and higher probability of arrest for both the displaced worker and family members. Leveraging a banking policy reform, we find that greater access to credit attenuates the criminal response to job loss. Impacts on arrests are pronounced for property crimes and among younger men for whom opportunities in criminal enterprises are prevalent. Taken together, our results are consistent with economic incentives contributing to criminal participation decisions after job losses.Citation
Khanna, Gaurav, Carlos Medina, Anant Nyshadham, Christian Posso, and Jorge Tamayo. 2021. "Job Loss, Credit, and Crime in Colombia." American Economic Review: Insights, 3 (1): 97-114. DOI: 10.1257/aeri.20190547Additional Materials
JEL Classification
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- J63 Labor Turnover; Vacancies; Layoffs
- K42 Illegal Behavior and the Enforcement of Law
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements