The Violent Consequences of Trade-Induced Worker Displacement in Mexico

The Violent Consequences of Trade-Induced Worker Displacement in Mexico. Melissa Dell, Benjamin Feigenberg, Kensuke Teshima. Harvard University and NBER, University of Illinois at Chicago, ITAM. May 2018. “Mexican manufacturing job loss induced by competition with China increases cocaine trafficking and violence, particularly in municipalities with transnational criminal organizations. When it becomes more lucrative to traffic drugs because changes in local labor markets lower the opportunity cost of criminal employment, criminal organizations plausibly fight to gain control. The evidence supports a Becker-style model in which the elasticity between legitimate and criminal employment is particularly high where criminal organizations lower illicit job search costs, where the drug trade implies higher pecuniary returns to violent crime, and where unemployment disproportionately affects low-skilled men.”

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