Abstract
This paper studies the dynamic response of crime to a positive income shock. We estimate the short- and medium-run effects that an increase in copper price had on the local economy and on criminal activity in Chile, which is the world’s leading copper producer. After a decade of high prices, mining municipalities did not exhibit lower crime rates compared to non-mining municipalities. To explain this counterintuitive result, we investigated heterogeneous dynamic effects and observed that property crimes decreased only at the beginning of the boom. As the dynamics of unskilled employment are consistent with the crime cycle, we argue that crime evolves due to temporary labor market adjustments.
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