ASSESSING THE IMPACTS OF LABOR MARKET AND DETERRENCE VARIABLES ON CRIME RATES IN MEXICO

Authors

  • YU LIU,

    1. Liu: Assistant Professor, Department of Economics and Finance, University of Texas at El Paso, 500 W. University Ave., College of Business Administration, Room 236, El Paso, TX 79968. Phone 915-747-7728, Fax 915-747-6282, E-mail yliu4@utep.edu
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  • THOMAS M. FULLERTON JR.,

    1. Fullerton: Professor, Department of Economics and Finance, University of Texas at El Paso, 500 W. University Ave., College of Business Administration, Room 236, El Paso, TX 79968. Phone 915-747-7747, Fax 915-747-6282, E-mail tomf@utep.edu
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  • NATHAN J. ASHBY

    1. Ashby: Assistant Professor, Department of Economics and Finance, University of Texas at El Paso, 500 W. University Ave., College of Business Administration, Room 236, El Paso, TX 79968. Phone 915-747-7791, Fax 915-747-6282, E-mail njashby@utep.edu
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    • Partial financial support for this study was provided by Hunt Communities, El Paso Water Utilities, Texas Department of Transportation, JPMorgan Chase Bank of El Paso, the UTEP College of Business Administration Faculty Research Grant Fund, and the UTEP University Research Institute. Econometric research assistance was provided by Avilia Bueno, Carlos Morales, Francisco Pallares, and Teodulo Soto.


Abstract

Many studies examine the relationship between crime rates and various economic and/or sociodemographic variables in high income countries, but similar efforts for middle and low income countries are less common. Utilizing an 8-year panel data sample for all 32 states in Mexico, this study assesses the impact of Mexican labor market and deterrence variables on various Mexican crime rates. The principal results indicate that: (1) State gross domestic product (GDP) per capita has ambiguous effect on crime rates under different conditions. Both wages and unemployment rates are negatively linked with crime rates. (2) Although the Mexican judicial and public security systems are widely believed to be ineffective, increased federal police forces and incarceration rates are associated with lower crime rates, but higher public security expenditure per capita is associated with higher crime rates. (3) The impacts from labor market and deterrence variables presented in (1) and (2) continue to hold under the Fox administration as well as for non-border states. Their respective impacts diminish, however, under the Calderon administration as well as for border states because of the small number of observations. Overall, the results indicate that increasing average wages, federal police forces, and incarceration rates would have significant impacts on reducing crime rates in Mexican states. (JEL O54, K42)

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