Sandra Rozo

Is Murder Bad for Business? Evidence from Colombia

Abstract This paper studies the effects of violent crime on market prices and size using plant-level panel data in Colombia. To estimate causal effects, I exploit reductions in violence driven by increases in security expenditures during A lvaro Uribe’s presidency; these resulted in greater violence reductions in municipalities that voted for him in the 2002 elections as he was looking for reelection. I find that firms that face higher violence also face lower output and input prices. Output prices fall more than the prices of inputs, which drives firms to reduce production, and some firms exit the market. Workers see reductions in their real income.

Explaining the Heterogeneous Effects of Natural Resources on Local Economic Development

This article investigates whether the existence of a resource curse in areas with high violence may be explained by the physical characteristics of resources. To identify causal effects, I employ Colombian data and exploit the fact that municipalities with preexisting reserves of resources increase production disproportionately when international market conditions are favorable. I find that lootable and obstructable resources (e.g., gold and oil) are detrimental for growth, whereas non-lootable and non-obstructable minerals (e.g., coal) enhance growth. The effects of gold and oil are explained by higher violence and are concentrated in areas where violent groups compete to appropriate those resources.

Creating New Opportunities for Rural Producers: Impact Evaluation of a Pilot Program in Colombia

Abstract This paper presents the impact evaluation of a pilot program that treated 57 small organizations of agricultural producers with high risk of getting involved in illegal drug production in Colombia. The program supported producers mainly by facilitating the commercialization of their new licit alternative sources of income. We combine propensity score matching, regression discontinuity, and Bayesian decision theory, with unique and rich panel data to assess the economic impact of the program. Our results suggest that the program was successful on increasing total sales and improving the product’s quality for the treated producers. The intervention was more successful when combined with other programs that gave producers incentives to abandon illegal drug production definitely.

Same Bureaucracy, Different Outcomes in Human Capital? How Indigenous and Rural Non-Indigenous Areas in Panama Responded to the CCT

This paper estimates the impact of the conditional cash transfer program, Red de Oportunidades, on human capital outcomes in areas with different incidences of poverty: indigenous and rural non-indigenous areas of Panama. The analysis relies on data from the Living Standards Measurement Survey of 2008. It uses a propensity score matching technique to identify the impact of the program by replicating the selection criteria followed by the government. Our results show that the program increased school enrollment and was able to reduce child labor in both areas. In rural areas, the impact of the program on education outcomes was restricted to enrollment in middle school where we estimated an increase of 10.2 percentage points (pp). The program also increased the proportion of children that completed elementary school by 13.8 pp, although it did not have an impact on enrollment in elementary or high school. In indigenous areas, the impact of the program on education outcomes was restricted to enrollment in elementary school where we estimate an increase of 7.9 pp. Additionally, the results show that the program reduced child labor in children ages 12 to 15 in both areas: by 10.1 pp in rural areas and 15.8 pp in indigenous areas. With regard to preventive health care services, we found no evidence of impact on the numbers of visits to health care providers or the number of vaccines that children received. However, we estimated that the proportion of women who had a Papanicolau test screening because of the program increased by 11.7 pp in rural areas and 14.7 pp in indigenous areas. Sadly, we found that the program might also have led to an increase in the number of pregnancies in rural areas: the proportion of pregnant women in 2008 was 3.2 pp higher in the beneficiary group than in the control group, and the number of pregnancies since the beginning of the program increased by 0.44 among beneficiaries---despite the fact that the number of children ages 3 to 6, who were born before the implementation of the program, was not statistically different between the groups.

Blessing or Burden? The Impact of Refugees on Businesses and the Informal Economy

We study the impact and sudden arrival of more than 3 million Syrian refugees on Turkish businesses. Our empirical design uses the exogenous variation in refugee outflows from Syria and the geographic concentration of Arabic-speaking communities in Turkey prior to the onset of the Syrian conflict. The origin of these communities dates back to the rupture of the Ottoman Empire after World War I, a unique historic episode. Using yearly firm census data from 2006 to 2015, we find that refugee inflows induced a positive impact on the intensive and extensive margins of firm production. The effects are stronger for smaller firms and for firms that operate in the construction and hospitality sectors, they are also largely concentrated in the informal economy.

Deportation, Crime, and Victimization

We study whether the forced removal of undocumented immigrants from the United States increases violent crime in Mexican municipalities. Using municipal panel data on homicide rate matched with annual deportation flows from the United States to Mexico, we assess whether municipalities with repatriation points experience higher violent crime with surges in deportation flows. We consistently find that municipalities with greater geographic exposure to deportation flows have higher violent crime. The effects are mostly driven by increments in homicide rate of young males and minors.

Are Immigration Inflows Good for Business? The Role of Informality in Developing Countries

This article examines the effects of large inflows of internally displaced persons (IDP), who are primarily absorbed by the informal sector, on the behavior of formal manufacturing firms in Colombia. To identify causal effects, we employ annual firm-level panel data between 1995 and 2010 and exploit the fact that, when conflict intensifies, forcefully displaced individuals tend to migrate to municipalities where people from their origin locations settled earlier. We find that large inflows of IDP induce sizable negative effects on the intensive and extensive margins of production of formal firms. These effects are stronger for firms operating in sectors that face a stronger competition from the informal economy.