JOB MARKET PAPER
Declining Deadly Demand? The Impact of US Marijuana Liberalization on Violence in Mexico [PDF]
Abstract
Abstract: Marijuana demand in the United States historically provided drug cartels with a thriving export market, fueling marijuana cultivation and violence in Mexico. However, the liberalization of marijuana laws in the US led to an explosion of marijuana production in the US, lowering demand for marijuana imports from Mexico, ceteris paribus. Using a sample of over 2,300 rural municipalities from 1996-2018, I compare the impacts of US liberalization on Mexican municipalities more suitable to marijuana cultivation relative to those less suitable. These results show US marijuana laws have led to a large and statistically significant reduction in both marijuana cultivation and gun-related homicides in Mexico as well as an increase in legal agricultural output. Through 2018, US liberalization induced a further decrease in marijuana cultivation of 27 percentage points in a municipality in the top decile of suitability compared to one of average suitability, a further decrease in gun-related homicides of 19 percentage points, and a further increase in legal agricultural output of 9 percentage points. The increase in legal agricultural output provides evidence that these poor rural municipalities look to replace the income lost to marijuana production in the US. By isolating exogenous variation in marijuana cultivation in Mexico, I show a 10% decrease in cultivation decreases gun-related homicides 1-6%. These findings directly tie US drug demand to violence in Mexico.