Homicide and work: the impact of Mexico's drug war on labor market participation

Available from: 
October 2013
Paper author(s): 
Sarah Pearlman (Vassar College)
Ariel BenYishay (University of New South Wales)
Conflict, Crime and Violence

We estimate the impact of the escalation of the drug war in Mexico on the mean hours worked among the general population. We focus on homicides, which have increased dramatically since 2006. To identify the relationship between changes in homicides and hours worked, we exploit the large variation in the trajectory of violence across states and over time. Using fixed effects and instrumental variables regressions, we find that the increase in homicides has negatively impacted labor force activity. An increase in homicides of 10 per 100,000 in a given state is associated with a decline between 0.3 and 0.6 weekly hours worked among the state’s population. For states most impacted by the drug war, this implies an average decline of one to three worked per week. These impacts are larger for the self-employed, specifically those who work from home. This provides evidence that the fear of violence can lead to behavioral changes that lower economic activity.


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Research section: 
Lacea 2013 annual meeting
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