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Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization

Author

Listed:
  • Rafael Dix-Carneiro
  • Rodrigo R. Soares
  • Gabriel Ulyssea
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.

Suggested Citation

  • Rafael Dix-Carneiro & Rodrigo R. Soares & Gabriel Ulyssea, 2018. "Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization," American Economic Journal: Applied Economics, American Economic Association, vol. 10(4), pages 158-195, October.
    • Handle: RePEc:aea:aejapp:v:10:y:2018:i:4:p:158-95
    Note: DOI: 10.1257/app.20170080
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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