Crime and Microenterprise Growth: Evidence from Mexico

SummaryWe explore the relationship between property crime and growth among microenterprises in Mexico. We use data on microenterprises and crime incidence from victimization surveys. We find that higher rates of property crime are associated with a significantly lower probability an enterprise plans to expand or experiences income growth in the subsequent 12 months. These effects are unique to property crimes and are not due to preventative measures undertaken by more rapidly expanding firms or other sources of reverse causality. These conclusions also are robust to a number of controls for firm heterogeneity and for local institutional quality.