The spatial and economic relationship between labour informality and homicides in Cali, Colombia

Abstract

MotivationIn the analysis of the relationship between the labour market and crime, the variable that comes from the labour market is generally the unemployment rate. However, there are labour market characteristics that are more significant than unemployment, such as labour informality, in the context of violent crime in low‐income and middle‐income countries.PurposeThis article aims to estimate the spatial and economic relationship between homicides and labour informality by neighbourhood in Cali, the city with the highest homicide rate currently and historically in Colombia.Methods and approachUsing administrative data and a unique survey of formal and informal labour market conditions, we estimate a Spatial Durbin Model to capture the spatial endogeneity of the relationship between homicides and the labour market in the city's neighbourhoods.FindingsThe main results show evidence of the positive spatial and economic relationship between labour informality and homicides in the city's neighbourhoods. In addition, the bulk of this effect occurs in some hillside settlement neighbourhoods with characteristics associated with acute labour informality.Policy implicationsWe propose a social and economic development programme to improve the conditions of the informal labour market and therefore achieve a reduction in homicides in specific areas, such as city hot spots found in our spatial results.