Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia

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August 2019
Paper author(s): 
Gaurav Khanna
Carlos Medina
Anant Nyshadham
Jorge Tamayo
Conflict, Crime and Violence

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 Medellίn 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.


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