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Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization

Dix-Carneiro, R; Soares, RR; Ulyssea, G; (2018) Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization. American Economic Journal: Applied Economics , 10 (4) pp. 158-195. 10.1257/app.20170080. Green open access

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Abstract

This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor market conditions, public goods provision, and income inequality. We propose a novel framework exploiting the distinct dynamic responses of these variables to obtain bounds on the effect of labor market conditions on crime. Our results indicate that this channel accounts for 75 to 93 percent of the effect of the trade-induced shocks on crime.

Type: Article
Title: Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization
Open access status: An open access version is available from UCL Discovery
DOI: 10.1257/app.20170080
Publisher version: https://doi.org/10.1257/app.20170080
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10131611
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