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Illegal markets and contemporary slavery: Evidence from the mahogany trade in the Amazon

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  • Araujo, Daniel
  • Barreto, Yuri
  • Castro, Danny
  • Tigre, Robson

Abstract

Modern slavery is a major global concern, with an estimated 49.7 million people enslaved in 2022. This paper explores the impact of illegal markets on this phenomenon, focusing on the complete shutdown of the mahogany market in the late 90s in Brazil. Utilizing a quasi-experimental research design that exploits the natural variation in the occurrence of mahogany trees in Brazilian municipalities, we employ novel administrative data on labor inspections to assess the effects of this shutdown on modern slavery. Our results indicate that the mahogany market shutdown significantly increased the probability of labor inspections discovering slave labor in affected municipalities. The outcomes are not influenced by coordinated police efforts targeting locations following the alteration in the law. We validate our findings with several robustness exercises.

Suggested Citation

  • Araujo, Daniel & Barreto, Yuri & Castro, Danny & Tigre, Robson, 2024. "Illegal markets and contemporary slavery: Evidence from the mahogany trade in the Amazon," Journal of Development Economics, Elsevier, vol. 166(C).
    • Handle: RePEc:eee:deveco:v:166:y:2024:i:c:s0304387823001335
    DOI: 10.1016/j.jdeveco.2023.103177
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    References listed on IDEAS

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    1. Ariaster B. Chimeli & Rodrigo R. Soares, 2017. "The Use of Violence in Illegal Markets: Evidence from Mahogany Trade in the Brazilian Amazon," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 30-57, October.
    2. Juliano Assunção & Clarissa Gandour & Romero Rocha & Rudi Rocha, 2020. "The Effect of Rural Credit on Deforestation: Evidence from the Brazilian Amazon," The Economic Journal, Royal Economic Society, vol. 130(626), pages 290-330.
    3. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    4. Ariaster B. Chimeli & Roy G. Boyd, 2010. "Prohibition and the Supply of Brazilian Mahogany," Land Economics, University of Wisconsin Press, vol. 86(1), pages 191-208.
    5. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    6. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
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    Cited by:

    1. Dias, Lucas Cardoso Corrêa & Cícero, Vinicius Curti, 2024. "Donkey business: trade, resource exploitation, crime and violence in a contestable market," OSF Preprints qreum, Center for Open Science.

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    More about this item

    Keywords

    Modern slavery; Deforestation; Illegal markets;
    All these keywords.

    JEL classification:

    • J47 - Labor and Demographic Economics - - Particular Labor Markets - - - Coercive Labor Markets
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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