Daniel Ramos-Menchelli

Spatial Mobility, Economic Opportunity, and Crime, with Gaurav Khanna, Carlos Medina, Anant Nyshadam, Jorge Tamayo, and Audrey Tiew

• Revise and Resubmit, American Economic Review

Neighborhoods are strong determinants of both economic opportunity and criminal activity. Does improving connectedness between segregated and unequal parts of a city predominantly import opportunity or export crime? We use a spatial general equilibrium framework to model individual’s decision of where to work and whether to engage in criminal activity, with spillovers across the criminal and legitimate sectors. We match at the individual level various sources of administrative records from Medell´ın, Colombia to construct a novel, granular dataset recording the origin and destination of both workers and criminals needed to identify key parameters of the model. We leverage the roll out of a cable car system to identify key parameters of the model informing how changes in transportation costs causally affect the location and sector choices of workers and criminals. Our counterfactual exercises indicate that, when improving the connectedness of almost any neighborhood, overall criminal activity in the city is reduced and total welfare is improved.

The Spatial Consequences of Financial Frictions: Evidence from Brazil, with Bernardus Van Doornik (New Draft Coming Soon)  

What are the regional and distributional consequences of government subsidies in credit markets? We provide theory and evidence to answer this question using detailed administrative data from Brazil. We build a dynamic spatial general equilibrium model with working capital constraints in which a government can subsidize credit across sectors and regions. We show that spatial linkages through trade, migration, and input-output relationships are crucial to understand the long-run consequences of such policies. Guided by the model, we evaluate the long-run sectoral and skill composition effects of a credit place-based policy in Brazil. We exploit the fact that treatment intensity varied discontinuously across a geological border. Using a dynamic regression discontinuity design, we find that, after the credit shock, treated municipalities become more agricultural-oriented and less skill-intensive. We estimate the model by matching the reduced-form moments and perform counterfactual simulations to evaluate the regional and distributional effects of credit subsidies. These simulations indicate that credit subsidies differentially increase welfare in richer regions with smaller effects on poorer ones. An alternative policy that improves bankruptcy procedures through court reform, decreasing the cost of credit in local labor markets, differentially improves welfare in poorer regions.