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The good, the bad and the ugly: The socio-economic impact of drug cartels and their violence in Mexico

Author

Listed:
  • Roxana Gutierrez-Romero

    (Departament d’Economia Aplicada, Universitat Autonama de Barcelona)

  • Monica Oviedo Leon

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

Abstract
This paper assesses the impact that drug cartels and their associated violence have had on development in Mexico. For this purpose, we monitor official and media reports to identify where cartels have operated with and without drug related homicides. Using the difference-in-difference kernel matching method, we find that on the one hand, inequality declined to a large extent in areas where cartels were active without incidents of drug related homicides. On the other, poverty increased in areas that had both the lowest and the highest rates of drug related homicides. Two reasons could explain this increase in poverty. In the most violent areas the number of employers and remunerations declined in key industries, such as manufacturing. In the least violent areas poverty increased possibly due to people migrating from the more violent places.

Suggested Citation

  • Roxana Gutierrez-Romero & Monica Oviedo Leon, 2014. "The good, the bad and the ugly: The socio-economic impact of drug cartels and their violence in Mexico," Working Papers wpdea1407, Department of Applied Economics at Universitat Autonoma of Barcelona.
    • Handle: RePEc:uab:wprdea:wpdea1407
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    File URL: https://ecap.uab.cat/RePEc/doc/wpdea1407.pdf
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    References listed on IDEAS

    as
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    2. Gabriela Calderon & Gustavo Robles & Beatriz Magaloni, 2013. "Economic Consequences of Drug-Trafficking Violence in Mexico," Research Department Publications IDB-WP-426, Inter-American Development Bank, Research Department.
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    5. Astorga, Luis & Shirk, David A., 2010. "Drug Trafficking Organizations and Counter-Drug Strategies in the U.S.-Mexican Context," University of California at San Diego, Center for U.S.-Mexican Studies qt8j647429, Center for U.S.-Mexican Studies, UC San Diego.
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    7. Dube, Arindrajit & Dube, Oeindrila & García-Ponce, Omar, 2013. "Cross-Border Spillover: U.S. Gun Laws and Violence in Mexico," American Political Science Review, Cambridge University Press, vol. 107(3), pages 397-417, August.
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    9. Roxana Gutierrez-Romero & Alessandra Conte, 2014. "Estimating the impact of Mexican drug cartels on crime," Working Papers wpdea1406, Department of Applied Economics at Universitat Autonoma of Barcelona.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Osuna Gómez Daniel, 2021. "The Impact of the Capture of Leaders of Criminal Organizations on the Labor Market: Evidence from Mexico," Working Papers 2021-19, Banco de México.

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    More about this item

    Keywords

    Drug Cartels; Violence; Poverty; Inequality; Education; Migration; Kernel matching;
    All these keywords.

    JEL classification:

    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • R59 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Other
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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