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The Unintended Consequences on Crime of "Pennies from Heaven"

Author

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  • Montolio, Daniel
Abstract
This paper examines how an infrastructure investment policy, implemented nationwide at the local level, has affected local crime rates. This policy, developed in the wake of the global recession of 2008-09, was designed to boost local economies through job creation. Using monthly figures from the Spanish region of Catalonia's more than 900 municipalities, the paper exploits geographic and time variation in the Spanish Ministry of Public Administration's random approvals of local investment policies, to estimate their impact on both (un)employment and crime. The combination of difference-in-differences and IV estimates makes it possible to precisely assess both the size and timing of the policy's impact on the local labor market and on municipal-level crime rates. While the policy apparently did not tackle the economic recession over the long run, local public finances did experience a boost over the short term, resulting in a temporary reduction in local unemployment rates (as legally required by the policy), as well as a significant drop in crime rates.

Suggested Citation

  • Montolio, Daniel, 2016. "The Unintended Consequences on Crime of "Pennies from Heaven"," IDB Publications (Working Papers) 7431, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:7431
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    References listed on IDEAS

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    More about this item

    Keywords

    Crime; Unemployment; Local investment Policies; Local economic development *; IDB-WP-666;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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