Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/114076
Authors: 
Oguzoglu, Umut
Ranasinghe, Ashantha
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9209
Abstract: 
Establishment exposure to crime is a frequent occurrence and a major obstacle to business operation in developing economies. We present a simple theory for the frequency and severity of crime across establishment size that is validated against the data in South America. We find that high expectation of crime at the establishment- level is strongly associated with lower sales, labor and capital investment, and consistent with our theory is most evident among medium size establishments. We consider a variety of specifications that are tenable with a causal interpretation of our results. Moreover, when evaluated relative to a host of distortions emphasized in the literature, crime remains important for explaining establishment size and addressing it may be one of the more important policy reforms for spurring development in South America.
Subjects: 
crime
establishment size
misallocation
JEL: 
O1
O4
D2
Document Type: 
Working Paper

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