Empirical Economics

, Volume 57, Issue 2, pp 653–681 | Cite as

Drug-related violence in Mexico and its effects on employment

  • Roberto Coronado
  • Eduardo SaucedoEmail author


This paper examines the effects of drug-related crimes on employment in Mexico at the state level during the period 2005–2014. Results indicate that such crimes have a negative impact on employment. We are able to decompose employment into low-skilled and high-skilled employment, and results are heterogeneous among both types of employment. Results indicate that a 10% increase in drug-related crimes reduces total employment up to 0.9%. Additionally, our empirical findings indicate that high-skilled employment is more sensitive to an increase in drug-related violence than low-skilled employment. Low-skilled employment decreases up to 0.3%, while skilled employment declines up to 1.5% when drug-related violence increases by 10%. It is also found that skilled employment responds at an increasing rate when drug violence skyrockets. We also find that a rise in drug-related crimes increases wages as a mechanism to retain jobs in violent places.


Employment Education attainment Mexico Panel data Violence 

JEL Classification

C23 F21 H56 J21 J61 J62 



Any views expressed here are solely those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System. The authors wish to thank two anonymous referees from this journal, for helpful comments on a previous version of this paper.


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Data sources

  1. Data source of interest rates and the real exchange rate. Accessed Apr 2015
  2. Data source for the different employment categories, state economic activity, wages and state prison population. Accessed Apr 2015
  3. Data source of the different crime categories. Accessed May 2015

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Federal Reserve Bank of Dallas, El PasoEl PasoUSA
  2. 2.EGADE Business SchoolTecnológico de MonterreyGarza GarcíaMexico

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