Metal prices and crimes against property in Chilean mining municipalities: transmission channels during a ‘super cycle’
Félix Modrego, Manuel Pérez-Trujillo, Leónidas Hernández, Alicia ChávezAbstract
We test the effects of metal price shocks on property crime rates in Chilean mining municipalities during the early-2000s commodity boom – known as the ‘super cycle’ – and examine plausible transmission channels. We find that metal prices exerted a positive cumulative effect on property crime rates over time. Rising prices led to increased expected unskilled wages and, in turn, higher school dropout rates. Eventual declines in prices were unaccompanied by a symmetric return to schooling or wage declines to maintain full employment, resulting in increased unskilled unemployment and, ultimately, increased property crime rates. Reduced-form and simultaneous-equation models confirm the proposed channels, which appear specific to metal-mining municipalities and to property crimes.