Guns N' Roses

Guns N’ Roses: The Impact of Female Employment Opportunities on Violence in Colombia Sara Hernández⇤ August 15, 2015 Abstract This paper investigates the impact of the dramatic growth of the fresh-cut flower industry in Colombia on different forms of violence. My empirical strategy exploits variation in the geo-climatic suitability for flowers to understand how export shocks affect violence at the municipality level. I show that flower shocks lead to a differential reduction in unorganized violent crime (homicide rates) in the suitable municipalities, but not to any changes in participation in guerrilla warfare. In contrast, increases in the coffee price are associated with a decrease in civil conflict (as in Dube and Vargas, 2013) but, as I find in this paper, an increase in homicide. I propose a household model where households both participate in and indirectly consume criminal activities (organized and unorganized) and women have different preferences than men, which can explain these asymmetric results. Keywords: Flower Exports, Colombia, Violence, Civilian Conflict ⇤I am extremely grateful to Esther Duflo and Dave Donaldson for their feedback and guidance. I would also like to thank Abhijit Banerjee, Suresh Naidu, Juan Fernando Vargas and all the participants in the MIT Development Lunch and Applied Micro Lunch. I am grateful to Juan Fernando Vargas and Oeindrila Dube for making their conflict data available. I am much obliged to Pascual Restrepo for all his constructive comments and suggestions, and to Sebastian Akle, David Colino, Reshma Hussam, Patricia Gómez, David Jiménez, Srishti Nayak, Giovanni Reggiani and Julian Urrutia for their invaluable encouragement. Ana Bermúdez and Jorge Bermúdez provided expert insights into the Colombian flower industry. All errors are my own. PhD Candidate. Massachusetts Institute of Technology, Department of Economics. Email: [email protected] 1 1 Introduction “To save Colombia from cocaine, buy its roses”1 – Former President of Colombia, César Gaviria, Wall Street Journal Op-Ed (1990) “Better roses than cocaine, no?”2 – Nicholas Kristof, New York Times Op-Ed (2008) In the beginning of the 1990s decade Colombia was landswept with violence. Submerged in an ongoing civil conflict, control over drug production soon became a catalyst for the disintegration of public order. Almost twenty years later, the popular sentiment that encouraging legal commerce and strengthening international trade ties could set the path for a peaceful and steady process of socio-economic development still lingered. In fact, the fear that “blocking [Colombia’s] attempts to expand legal [coffee and flower] exports may be forcing Colombians to choose between drugs and poverty”3 (Passell, 1989) was an integral concern of the conversations in the policy circles. A question that naturally arises in this setting is: can the provision of jobs in the flower industry, predominantly female, indeed lead to decreased violence? And does it do so differentially relative to other sources of legal employment? The employment opportunities I consider are embedded within a greater global phenomenon: the in- creased feminization of the labor force (Mammen and Paxson, 2000). This incorporation of females into the labor market has often relied on the expansion of the manufacturing and agro-processing industries. Leading examples of this experience are found in the textile and garment industries of Bangladesh, the maquilas of México and the dagongmei in China. Spurred by international trade dictums, this new export-oriented jobs entail very specific characteristics: they have disproportionately targeted females, requiring them to attain a varying degree of educational skills. Remarkably, in many of these settings, female earnings in the paid labor force were once not considered the norm (ibid). Employing micro-level data, my goal is to estimate the impact of these local, agro-industrial shocks on various forms of violence in Colombia, always measured at the municipality level. The labor shocks are associated with the Colombian fresh-cut flower industry, which emerged in the year 1965. The arrival of the flower jobs soon transformed the landscape of formal employment opportunities, particularly for women, offering them ‘wages, security, and [a] sense of community’ (Friedeman-Sánchez, 2006). Noteworthy, throughout this period, Colombia experienced a secular increase in the female labor force participation rate, going from 47 percent in the 1980s to 65 percent by 2006 (Amador et al, 2012). 1César Gaviria (1990). “The Americas: To Save Colombia From Cocaine, Buy Its Roses”. The Wall Street Journal, op-ed, November 2, 1990. Accessed March 17, 2013. Retrieved from Factiva, Inc. http://new.dowjones.com/products/factiva/ 2Nicholas Kristof (2008). “Better Roses Than Cocaine”. New York Times, April 24, 2008. Accessed October 12, 2013. http://www.nytimes.com/2008/04/24/opinion/24kristof.htm 3Peter Passell. “Economic Scene: Fighting Cocaine, Coffee, Flowers”. New York Times, September 20, 1989. Accessed March 17, 2013. http://www.nytimes.com/1989/09/20/business/economic-scene-fighting-cocaine-coffee- flowers.html 2 Icontrastcommoditypriceshocksacrossindustriesandsectorsthatdifferintheiremploymentgender- intensity on an array of violence outcomes. I establish two categories: unorganized violent crime vs. armed conflictual violence. My source of identifying variation comes from the interaction between changes in the national value of flower production and the cross-sectional distribution of flower farms. The novelty of my study arises from its focus on an industry that is believed to be substantially female friendly: women constitute over 60 percent of the floricultural production workforce (Census, 2005). Primarily, I concentrate on violent forms of crime. I chose the homicide rate as my main outcome of interest,4 since this “form of [violence] has a broad impact on security and the perception of security” within any society (UNODC, 2013). To shed some light on the magnitude of the numbers, it is worth noting that, over the course of twenty-three years (1990–2013), there were approximately 500,000 homicides recorded in Colombia. That figure closely matches the world total number of homicides for the year 2013 (UNODC, 2013). I should emphasize that this form of general violent crime (homicides) happened within the broader context of an ongoing civilian conflict, to which I turn next. Secondarily, I extend my analysis into the realm of the illegal armed activity, thereby building on the Dube and Vargas (2013) study. Bringing the civil conflict and coffee sector into the picture allows me to do two things simultaneously: introduce a gender comparison, and look at the differential impact on various forms of violence. Irecognizethatviolencemightindisputablyaffectthelocationdecisionforanyeconomicactivity,including that of flower entrepreneurs. To deal with this potential source of endogeneity, I proceed with an instrumental variable strategy that relies on geo-climatic requirements. This allows me to determine the suitability of a municipality to become a flower-producing center. Further, to generate shocks to the flower value, I concentrate on the interplay between Colombian producers and other world exporters to the US market. My regressions will control for differential trends based on municipality characteristics—including, among others, the presence of coffee, petrol, altitude, and distance to the capital, as well as regional, linear time trends. My estimates suggest that the expansion of the flower industry led to a significant reduction in the homicide rate in the flower suitable municipalities. In summary, I find that a 1 percent increase in the national value of flower production differentially decreased the rate of homicides by –0.08 fewer homicides per flower hectare. In contrast, increases in coffee price led to a decrease in guerrilla warfare (as in Dube and Vargas, 2013) but, as I show in this paper, an increase in homicide. To guide the interpretation of these asymmetric results, I propose a household model where households both participate in and indirectly 4I look at other forms of crime, including different types of theft (personal theft, burglary, commercial theft, and vehicle theft) and kidnappings. 3 consume criminal activities (organized armed conflict and unorganized violence) and women have different preferences from men. I hypothesize that the gendered nature of this modern employment might have ignited a“pacifyingprocess”intheflowercommunities,onethatoccurredviafemaleincomeshocks. The results from the rose jobs offer a more subtle picture into the impact that the expansion of low-skill, semi-industrial employment opportunities has had for living standards in the developing world. I present new evidence on how international trade can dictate the evolution of violence within a nation, a question that remains of prime importance for development economists, particularly in the context of global trade. The remainder of the paper has the following organization: in Section II, I provide a conceptual framework, a compact introduction to the Colombian institutional context, and a description of the rapid expansion experienced by the flower industry. Section III illustrates my empirical strategy; Section IV describes the data; Section V discusses the estimation results. Finally, Section VI concludes. 2 Institutional Context and Background This section will discuss an introduction into the Colombian history, a conceptual framework to guide my empirical strategy and a brief account on

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