Working Paper: NBER ID: w26313
Authors: Gaurav Khanna; Carlos Medina; Anant Nyshadham; Christian Posso; Jorge A. Tamayo
Abstract: We investigate the effects of job displacement, as a result of mass-layoffs, on criminal arrests using a novel matched employer-employee-crime dataset in Medellín, Colombia. Job displacement leads to immediate earnings losses, and an increased likelihood of being arrested for both the displaced worker and for other youth in the family. We leverage variation in opportunities for legitimate reemployment and access to consumption credit to investigate the mechanisms underlying this job loss-crime relationship. Workers in booming sectors with more opportunities for legitimate reemployment exhibit smaller increases in arrests after job losses. Greater exposure to expansions in consumption credit also lowers the job loss-crime elasticity.
Keywords: Job Displacement; Crime; Consumption Credit; Colombia
JEL Codes: J63; J65; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| immediate earnings losses (J17) | increased likelihood of arrest (K42) |
| job displacement (J63) | economic incentives shape criminal behavior (K42) |
| job displacement due to mass layoffs (J63) | immediate earnings losses (J17) |
| job displacement due to mass layoffs (J63) | increased likelihood of arrest (K42) |
| job displacement (J63) | increased likelihood of arrest for family members (J12) |
| greater access to legitimate reemployment opportunities (J68) | mitigate criminal responses (K42) |
| access to credit (G21) | reduce propensity to engage in crime (K42) |