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Violence in Mexico: An economic rationale of crime and its impacts

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  • Enrique Leonardo Kato Vidal

    (Universidad Autonoma de Queretaro)

Abstract

Violence has been identified as an obstacle to economic growth in Mexico, and the purpose of this article is to 1) explain the high rate of homicide in Mexico and 2) estimate the impact of violence on the economy. An equation that is similar to Becker’s equation was defined, and it incorporates the benefits and costs of committing criminal activity; the estimates were performed with a dynamic panel of quarterly data from 32 federal entities. The study shows that a higher sentencing rate could inhibit the emergence of violence, whereas a higher rate of labor participation incentivizes additional criminal activity. In addition, it has been demonstrated that an increase in crime negatively impacts salaries as well as the rate of employers. Despite the strong inertia of violence, the homicide rate may be reduced if the sentencing rate is increased and economic growth is improved, which would reduce unemployment.

Suggested Citation

  • Enrique Leonardo Kato Vidal, 2015. "Violence in Mexico: An economic rationale of crime and its impacts," EconoQuantum, Revista de Economia y Finanzas, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 12(2), pages 93-108, Julio-Dic.
    • Handle: RePEc:qua:journl:v:12:y:2015:i:2:p:93-108
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Economics of Crime; Deterrence; Mexico.;
    All these keywords.

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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