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A Tale of Gold and Blood: The Consequences of Market Deregulation on Local Violence

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  • Leila Pereira
  • Rafael Pucci

Abstract

We investigate how a private market deregulation affected the incentives for monitoring gold transactions in Brazil, ultimately leading to an increase in illegal gold mining and violence. Employing a Difference-in-Differences design and a unique database that combines the geological occurrence of gold deposits and protected areas, where mining is forbidden, we first show that the deregulation encouraged illegal gold mining. We use high-resolution data on deforestation as a proxy for illegal mining activity. Then, we demonstrate that municipalities more exposed to illegal gold mining experienced almost eleven additional homicides per 100,000 people - roughly 30% more - after the deregulation.

Suggested Citation

  • Leila Pereira & Rafael Pucci, 2024. "A Tale of Gold and Blood: The Consequences of Market Deregulation on Local Violence," Working Papers, Department of Economics 2024_18, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2024wpecon18
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    References listed on IDEAS

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    More about this item

    Keywords

    Monitoring; Violence; Illegal mining; Deforestation; Amazon;
    All these keywords.

    JEL classification:

    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources

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