Economic theory suggests that inequality should influence crime positively. Yet, the evidence in favor of that hypothesis is weak. Pure cross‐sectional analyses show significant positive effects but cannot control for fixed effects. Time series and panel data point to a variety of results, but few turn out being significant. The hypothesis maintained in this paper is that it is a specific part of the distribution, rather than the overall distribution as summarized by conventional inequality measures, that is most likely to influence the rate of (property) crime in a given society. Using a simple theoretical model and panel data in seven Colombian cities over a fifteen‐year period, a structural model is proposed that permits identifying the precise segment of the population whose relative income best explains time changes in crime. (JEL: K42, D63, O15)
This paper first provides an overview of the levels of minimum wages in Latin America and their true impact on the distribution of wages using both numerical measures and kernel density plots. It identifies "numeraire" effects higher in the wage distribution and "lighthouse" or reference effects in the unregulated or "informal" sector. The final section then employs panel employment data from Colombia, a country where minimum wages seem high and very binding, to quantify the effects of an increase on wages and employment. The evidence suggests that in the Latin American context, the minimum wage has impacts beyond those usually contemplated in the advanced country literature.
1The authors present various matching estimators of the impact on earnings for individuals who attended public and private job training programs in Colombia. The authors estimate propensity scores by controlling for the wide variety of personal and socioeconomic background variables of those individuals. The effect of training, measured by the mean impact of the treatment on the treated, shows that: (i) for youths, no institution has a significant impact in the short or long run except private institutions for males; the scope of the data, however, limits the reliability of the result; (ii) for adult males, neither SENA nor the other public institutions have a significant impact in the short or long run; (iii) for SENAtrained adult females there are positive but not significant impacts in the short run and greater and close to significant effects in the long run. All other public institutions have a higher impact that is significant in the long-run; (iv) for adults trained at private institutions there are large and significant effects in both the short and long run, but for adult males in the short run the effects are smaller and only barely significant. In addition, neither short nor long courses provided by SENA seem to have a significant impact on earnings. In general, females benefit more from both short and long courses than males. Finally, a cost-benefit analysis shows that under the assumption of direct unitary costs equal to SENA, private institutions are more profitable than public institutions, which are in turn more profitable than SENA.
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