NATIONAL BUREAU OF ECONOMIC RESEARCH
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Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia

Gaurav Khanna, Carlos Medina, Anant Nyshadham, Jorge A. Tamayo

NBER Working Paper No. 26203
Issued in August 2019
NBER Program(s):Development Economics Program, Labor Studies Program

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 MedellĂ­n 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.

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Document Object Identifier (DOI): 10.3386/w26203

 
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