Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127674
Authors: 
Ajzenman, Nicolas
Galiani, Sebastian
Seira, Enrique
Year of Publication: 
2014
Series/Report no.: 
Documento de Trabajo 158
Abstract: 
Reliable estimates of the effects of violence on economic outcomes are scarce. We exploit the manyfold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on house prices. We use an unusually rich dataset that provides national coverage on house prices and homicides and exploit within-municipality variations. We find that the impact of violence on housing prices is borne entirely by the poor sectors of the population. An increase in homicides equivalent to one standard deviation leads to a 3% decrease in the price of low-income housing. In spite of this large burden on the poor, the willingness to pay in order to reverse the increase in drug-related crime is not high. We estimate it to be approximately 0.1% of Mexico’s GDP.
Subjects: 
Drug-related homicides
Costs of crime
Poverty
JEL: 
K4
I3
Document Type: 
Working Paper

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