The Labor Market Effects of Drug-Related Violence in a Transit Country

By Andres Ham Gonzalez, Juanita Ruiz

We estimate the effects of drug-related violence on individual labor market outcomes in a transit country. Transit countries do not have enough market power to determine the global supply or demand of drugs yet must deal with the consequences of drug trafficking activities. We implement a Bartik-type instrumental variables strategy which assumes that violence in Honduran municipalities located along drug transport routes changes when coca production in Colombia grows or contracts. Our results show that drug-related violence has negative effects on extensive and intensive margin labor market outcomes for transit country workers and has greater effects on women than men.

IZA Working Paper 17126, Bonn: Institute of Labor Economics - IZA, 2024.