Fighting Crime in Lawless Areas: Evidence from Slums in Rio de Janeiro
American Economic Journal: Economic Policy (Forthcoming)
We use Rio de Janeiro's slum pacification program initiated in
2008 to analyze the effect of policies fighting crime in lawless areas.
We correct the bias from the unobserved rise in crime reporting via
the use of a proxy variable and bounded variation assumptions. We
find that the program reduced the murder and robbery rates, but
strongly increased the assault and threat rates. We explain these
results by providing evidence that increased enforcement weakened
the security service gangs provide on their turf, and may incentivize
criminals to switch from serious to less-serious crimes.