The capture of drug trafficking leaders between 2005 and 2011 not only had an impact on public spending when applying justice and increased violence in a region, it also caused a drop in wages and in the number of jobs in municipalities in those with the presence of cartels. The study “The impact of the capture of leaders of criminal organizations in the labor market: evidence from Mexico”, carried out by Daniel Osuna Gómez for the Bank of Mexico, reveals that between 2005 and 2011, the capture of narco leaders generated a drop in the number of labor sources.
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Unemployment on the rise in Mexico
“The capture of the cartel leader reduced wages by 5.3% in the municipalities with the presence of cartels, which is explained in part by a change from paid to unpaid work,” the study explains. The analysis, which focuses on the end of Vicente Fox’s administration and five of the six years of Felipe Calderón’s government, addresses how Mexico’s policy of capturing leaders of criminal organizations impacted the labor market. In those five years, he maintains, the intention was that with targeted arrests the hierarchical organization of the cartel would be altered and its operational capacity diminished. Of the 2,454 municipalities, 2,084 have no cartel presence, 208 one, 89 two, 55 three, and only 18 have four. The drop in salaries, according to the study, occurs a year later and gradually after the capture of cartel leaders and is attributed to an increase in the number of people who dedicate themselves to activities at home that are not paid, as well as informal work. “Additionally, the difficulty of finding a job affiliated with the IMSS increases: the number of workers in this type of job decreases and those who change jobs end up, on average, with a lower salary,” says the study. .
In addition, the study refers that the capture of criminal leaders can increase inequality in local labor markets. The report reviewed what happened in towns where the Sinaloa Cartel operated –after the capture of Alfredo Beltran Leyva–, the Tijuana Cartel –after the arrest of Eduardo Arellano Felix–, the Gulf Cartel –after the apprehension of Juan Carlos de la Cruz Reyna–, as well as the Juárez Cartel with the imprisonment of Pedro Sánchez Arras and the criminal organization La Familia –for the arrest of Alberto Espinoza Barron. He refers that when high-ranking members such as the leader or lieutenant were eliminated, two problems arose in these organizations: loss of leadership and power vacuum, which led to more violence. Furthermore, it is noted that the ‘decapitation’ increased the cruelty because these organizations sought to increase their reputation. The study also states that the more time that passes after the arrest of the leaders of organized crime, the more the effects on employment are accentuated, since the more months, the lower the participation in the labor market and the greater the unemployment or the performance of activities Unpaid. It details that after the capture of the leadership there was a decrease of 5.3% in hourly wages and 4.2% in the average monthly salary.
“These results indicate that households lose 160-165 pesos per month. This is similar to the amount spent by the average household on clothing, or half the amount spent on education,” he reports. The explanation for why the capture of the leaders decreases paid employment is that more people are engaged in domestic work and/or transferred to the informal sector. But the capture of the crime leaders also reduced the number of companies because, as the violence intensified, they had to move, which led to job losses. The report clarifies that allowing organized crime to act with impunity has adverse effects on the rule of law, institutions and the well-being of the population. In addition, it refers that transnational criminal organizations have a presence in all countries and earn 1.5% of world GDP, so the fight against them is one of the greatest global challenges of the international community.