Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization
American Economic Journal: Applied Economics
vol. 10,
no. 4, October 2018
(pp. 158-95)
(Complimentary)
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.Citation
Dix-Carneiro, Rafael, Rodrigo R. Soares, and Gabriel Ulyssea. 2018. "Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization." American Economic Journal: Applied Economics, 10 (4): 158-95. DOI: 10.1257/app.20170080Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- F13 Trade Policy; International Trade Organizations
- F16 Trade and Labor Market Interactions
- H41 Public Goods
- K42 Illegal Behavior and the Enforcement of Law
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O19 International Linkages to Development; Role of International Organizations
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