ESOC Working Paper 14: Formal Employment and Organized Crime - Regression Discontinuity Evidence from Colombia
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.
Khanna, G, C Medina, A Nyshadham, and J Tamayo, (2019). Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia (ESOC Working Paper No. 14). Empirical Studies of Conflict Project. Retrieved [date], from http://esoc.princeton.edu/wp14.