Economic Development, Inequality and Poverty

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Economic Development, Inequality and

Poverty: An Analysis of Urban Violence
in Colombia
Alexander Cotte Poveda
a b
Department of Economics, University of Gttingen, Platz der

Gttinger Sieben 3, 37073, Gttingen, Germany
b
Faculty of Accounting and Administration, University of La Salle,

Cra. 2 No. 10-70, Bogot, Colombia
Version of record first published: 29 Nov 2011
To cite this article: Alexander Cotte Poveda (2011): Economic Development, Inequality and Poverty:
An Analysis of Urban Violence in Colombia, Oxford Development Studies, 39:4, 453-468
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Oxford Development Studies,

Vol. 39, No. 4, December 2011
Economic Development, Inequality and

Poverty: An Analysis of Urban Violence
in Colombia
Downloaded by [Universidad Del Norte] at 14:44 31 July 2012
ALEXANDER COTTE POVEDA

ABSTRACT This paper analyses some determinants of urban violence in seven major Colombian
cities. The empirical research is intended to explore variations in violence across these Colombian
cities and the influence of these variations on Colombias economic development. In this study,
several econometric data panel models and various estimate types are applied to control
heterogeneity across the cities and to address endogeneity problems among the explanatory
variables. The results show that education, poverty, inequality and the labour market are strong
predictors of homicide rates in the seven Colombian cities. The results also demonstrate that citylevel homicide rates depend on the citys level of development and the tendency of urban violence to
persist over time. The findings thus demonstrate that factors such as inequality, poverty, education
and the labour market influence urban violence, thereby generating negative effects on Colombias
economic and social development.
JEL Classification: O1, O40, I30, C33
1. Introduction
Cities experience situations of violence and insecurity that manifest themselves in
different ways in diverse contexts in relation to the economic and social features of the
population (Moser, 2004). Thus, social structure affects the decisions and incentives of
agents that may lead to urban violence. The literature on urban violence suggests that
violence and insecurity may affect the growth and economic development of cities,
thereby decreasing the well-being of the population, social conditions, labour
opportunities and human capital (Tadjoeddin & Murshed, 2007).
Investigations of urban violence have adopted various approaches to analysing this
issue in several contexts. For example, Bettencourt et al. (2010) elaborated a method to
Alexander Cotte Poveda, Department of Economics, University of Gottingen, Platz der Gottinger Sieben 3, 37073
Gottingen, Germany, and Faculty of Accounting and Administration, University of La Salle, Cra. 2 No. 10-70,
Bogota, Colombia. Email: alexcotte@yahoo.com
The author would like to thank Prof. Dr Stephan Klasen and Dr Marcela Ibanez for their helpful suggestions
and comments. Additionally, the author would like to thank two anonymous reviewers for their valuable
comments and suggestions. The author is grateful for the support provided by Deutscher Akademischer
Austausch Dients (DAAD), the University of Gottingen and the University of La Salle. Any remaining errors are
the responsibility of the author.
ISSN 1360-0818 print/ISSN 1469-9966 online/11/040453-16
q 2011 Oxford Department of International Development
http://dx.doi.org/10.1080/13600818.2011.620085
454
A. Cotte Poveda
measure the dynamics of urban violence. The authors demonstrated that local urban
dynamics display long-term memory. Hence, cities could maintain their (dis)advantages
for decades. Kitchen & Williams (2010) investigated the relationship between crime and
quality of life in a Canadian city and found that social conditions affect citizens
perceptions of crime and safety. Gould & ORegan (2010) evaluated the influence of crime
on changes in cities populations using models with lagged measures of crime and
instrumental variables to create state-level measures of criminal justice systems. The
authors found that overall city growth is affected by changes in crime and by the
relationship between urban violence and the sources of population change (e.g. migration)
that are more sensitive to local conditions. Breetzke (2010) analysed associations between
various census measures of social disorganization and violent crime rates in a South
African city using a spatial regression. He demonstrated that violent crime is associated
with specific measures of socio-economic deprivation, residential mobility and culture.
These investigations found a relationship between urban violence and cities economic
and social structures in a variety of contexts. However, these studies did not analyse how
education, the labour market, poverty and inequality influence urban violence in cities
within a developing country.
In this paper, Colombia is selected as a case study to evaluate the determinants of urban
violence in a country characterized by a stable democratic government and little racial or
religious conflict. Colombia has been classified as a high-violence country by international
standards, with large increases in the rate of violence beginning in the mid-1980s (Sanchez
& Nunez, 1997). However, the country has not always been so violent. In the early 1970s,
the homicide rate in Colombia was very similar to that of other Latin American countries.
During that decade, however, the homicide rate increased such that the rate had doubled by
the early 1990s and tripled by the early 2000s. The most violent cities in Colombia are
Medelln and Cali, whereas the homicide rate in Bogota has remained similar to that of
other large Latin American cities and has even fallen sharply in recent years (Llorente,
2005; Restrepo & Osorio, 2011; Forensis, 2011). By contrast, in various years since the
1970s, Medelln has had the highest homicide rate and been ranked among the 10 most
violent cities in the world (Soares & Naritomi, 2010).
Drug trafficking and the presence of armed groups may explain the increase in violence
in Colombia (Rangel, 1999; Echanda, 1999; Rabasa & Chalk, 2001; Cotte, 2010). In
particular, two related factors have been described as contributing to this increase. First,
the competition over the control of drug markets, as well as the intrinsically criminal
nature of the drug business, generated a rise in the homicide rate. Second, the growth of
drug trafficking congested law enforcement institutions and helped in the diffusion of
criminal know-how, intensifying the initial effect and increasing the level of violence in
the beginning of the 1990s (Gaviria, 2000, p. 4; Gaviria & Velez, 2001, p. 149).
Studies of Colombian violence have analysed the political, social and economic causes
of violence, and the impact of armed groups and the legal system on violence. Research
has established that these factors may in part explain the increase in violence in the country
over the last decade (Sarmiento, 1999; Rubio, 2000; Gutierrez & Gallo, 2002; Valenzuela,
2002; Cotte & Pardo, 2011). Moreover, the resulting volatility of economic growth and
development over the last decade has negatively affected the most vulnerable population,
as demonstrated by deterioration in major social indicators such as poverty and social
welfare, and the violence has also generated a low rate of economic growth, which, in turn,
Economic Development, Inequality and Poverty
455
has intensified violence and crime (Garay, 2002; Contralora General de la Republica &
Centro de Investigaciones para el Desarrollo, 2004).
The relationships between violence, social conditions, drug trafficking, armed actors
(including guerrilla and paramilitary forces) and the efficiency of the justice system have
been studied using various econometric techniques (Sanchez & Nunez, 2001). For
example, Gaviria et al. (2008) applied hedonic price models to estimate the price that
households are willing to pay to avoid urban violence in Bogota and found that the
willingness to pay for a pure public good such as security creates urban private security
markets. Medina & Tamayo (2011) analysed the effect of the homicide rate on life
satisfaction. They found that the homicide rate has a negative effect on life satisfaction.
These studies have demonstrated the effect of violence on socio-economic conditions in
the Colombian context.
There are, however, only a few systematic investigations of the determinants of urban
violence in Colombia. Therefore, this study seeks to investigate the variations in urban
violence in relation to levels of development among the cities, and over time, using crosssectional analysis and dynamic panel analysis, respectively. In addition, I explore the role
of several social and economic development variables as determinants of urban violence in
the seven largest cities in Colombia. This analysis is possible given the variation in the
homicide rate among the seven largest cities in Colombia during the period 1984 2006,
and sharp increase over time, as well as differences in development variables.
The aim of this research is to determine empirically what variations in violence existed
in the seven Colombian cities in the period under study and how these variations have
influenced the economic development of the country. The research questions that guide the
paper are as follows: To what extent does crime persist over time? How does the
development level of cities influence urban violence? What is the role of education in
urban violence? What is the relationship between social conditions (e.g. poverty, GINI and
unsatisfied basic needs) and urban violence? How do labour market characteristics affect
urban violence?
To answer these questions, data from seven major Colombian cities during the period
1984 2006 are examined. In this study, several econometric data panel models and
different estimate types are applied to control heterogeneity across the cities and to address
endogeneity problems among the explanatory variables. The remainder of the paper is
organized as follows. Section 2 describes the data and methods of analysis, Section 3
presents the main findings and analyses the results and Section 4 concludes.
2. Data and Methodology

2.1 Data
In this study, I use panel data with quarterly clustering during the period 1984 2006 for
seven major cities in Colombia, namely, Barranquilla, Bogota, Bucaramanga, Cali,
Medelln, Manizales and Pasto. The dependent variable is the homicide rate of each city.
The data are from DANE, the National Institute of Legal Medicine, the National Police of
Colombia through the Centre of Criminalistics Research (DIJIN) (Centro de
Investigaciones Criminologicas, DIJIN) and the information systems SIEDCO and
Conflict Analysis Resource Centre (CERAC) (Centro de Recursos para el Analisis de
Conflictos).
456
A. Cotte Poveda
Explanatory variables are calculated from the National Survey of Households. These
variables are indicators of factors such as level of economic development, education
coverage, poverty, inequality and the labour market, and were chosen to address the research
questions that guide this analysis (the descriptive statistics are given in Appendix 1).
To analyse the development level of each city, the model includes aggregate-level
production per capita (GDPpc by city), prices and education (the average education level
of the population by city). To measure poverty and inequality in the sample period, the
following variables were used: the percentage of the population living in poverty; total
population with unsatisfied basic needs; and the GINI index. The labour market in the
cities was analysed using the following indicators: employment; unemployment; salaries;
and employment by industry in each city. Gould et al. (2002) demonstrated the close
relationship between labour market features and trends in violence.
2.2 Methodology
In this analysis, the estimation technique suggested in the study on crime and violence by
Fajnzylber et al. (2002) was used. Two econometric models were adopted. The first model
incorporates the time series as well as the cross-city dimensions of the data to analyse
several variables that generate variations in urban violence across cities. The second
model is dynamic because the explanatory variable set includes a lag of the dependent
variable and some explanatory variables that are potentially jointly endogenous in the
sense of being correlated with the error term. To estimate the models consistently and
efficiently, I use a cross-sectional regression analysis and a Generalized Method of
Moments (GMM) estimation for dynamic panel data models (Arellano & Bover, 1995;
Blundell & Bond, 1998) that includes regression equations for differences and levels, each
of which has a specific set of instrumental variables (i.e. I use the so-called System GMM
estimator).1 Moreover, I apply spatial interpolation to analyse the results using a different
approach.
The methods used in this research generate consistent estimates for the unobserved
individual effects that influence urban violence. These individual effects are generally
associated with variations in unobserved city-specific and time effects related to
heterogeneity across cities and their representative dynamics.
2.2.1 Cross-sectional regression analysis. Cross-sectional regression analysis generates
the following model:
yit a X 0it b mit
i 1; . . . ; N;
t 1; . . . ; T:
To analyse the consistency and robustness of the results of the cross-sectional regression
analysis, the Breusch & Pagan (1980) test was used, which derived a Lagrange multiplier
(LM) test, as modified by Baltagi (2006, 2008). Thus, the model is the following:
yit a xit b nit
H 0 sm2 sl2 0:
and the test is
457
The log-likelihood function under normality of disturbances is given by

1
1
log L constant 2 log jVj 2 y 2 Z g0 V 21 y 2 Z g
2
2
1
1
Ld; u constant 2 log jVj 2 m0 V 21 m
2
2
u0 s2m s2l s2n
V s2m I N ^J T s2l J N Î T s2n I NT :
where
and V is given by,
Solving,
LM

NT
m~0 I N ^J T m~ 2
NT
m~0 J N Î T m~ 2
12
1
2
:
2T 2 1
2N 2 1
m~0 m~
m~0 m~
2.2.2 Generalized method of moments estimator. Another model used in this paper
is the dynamic panel data GMM technique developed by Arellano & Bover (1995) and
Blundell & Bond (1998). This method estimates a regression equation in differences
and a regression equation in levels simultaneously, with a specific set of
instrumental variables used in each regression. The general equation of the model is the
following:
yit dyi;t21 x0it b hi 1i;t :
To eliminate the unobserved city-specific effects by specifying the regression equation (9)
in first differences:
yi;t 2 yi;t21 dyi;t21 2 yi;t22 bxi;t 2 xi;t21 1i;t 2 1i;t21 :
10
In this specification, the choice of instruments is designed to resolve two problems. The
first problem is the possible endogeneity of the explanatory variables (x), which is
indicated in the correlations between these variables and the error term. Second, the new
error term 1i;t 2 1i;t21 is correlated by construction with the differenced lagged
dependent variable, yi;t21 2 yi;t22 . In this procedure, the possibility of simultaneity and
reverse causation is allowed for instead of assuming strict exogeneity (i.e. no correlation
between the explanatory variables and the error term at all leads and lags). The more
flexible assumption of weak exogeneity was adopted, where the current explanatory
variables are affected by past and current realizations of the dependent variable but not by
its future innovations. Under the assumptions that the error term (n) does not exhibit serial
correlation and the explanatory variables are weakly exogenous, the following moment
458
A. Cotte Poveda
conditions apply:
Eyi;t2_s 1i;t 2 1i;t21 0
s $ 2; t 3; . . . ; T:
11
Exi;t2_s 1i;t 2 1i;t21 0
s $ 2; t 3; . . . ; T:
12
The differences estimator is based on the GMM estimator from moment conditions (11)
and (12). Although asymptotically consistent, this estimator is characterized by low
asymptotic precision and large biases in a small database, which leads to the need to
complement it with the regression equation in levels. Moreover, when the lagged
dependent variables and the explanatory variables are persistent over time, lagged levels
of these variables are weak instruments for the regression equation in differences
(Blundell & Bond, 1997; Alonso-Borrego & Arellano, 1999). This disadvantage affects
both the asymptotic and the small-sample performance of the differences estimator. As
persistence increases, so does the asymptotic variance of the coefficients obtained with the
differences estimator. Another problem with the simple differences estimator applies to
measurement error in that differencing may exacerbate bias due to variable errors by
decreasing the signal-to-noise ratio (Griliches & Hausman, 1986). The use of Arellano &
Bovers (1995) system estimator should reduce the potential biases and imprecision
associated with the usual differences estimator (Blundell & Bond, 1997).
At this stage, the city-specific factor is not directly eliminated but must be controlled
using instrumental variables. The adequate instruments for the regression in levels are the
lagged differences of the corresponding variables if the following assumption holds.
Although the levels of the right-hand side variables may be correlated with the cityspecific effect, there is no correlation between the differences of these variables and the
city-specific effect. This assumption results from the following stationarity property:
Eyi;tr_ hi Eyi;t_q hi and
Exi;tr_ hi Exi;t_q hi ; r and q:
13
Hence, the additional moment conditions for this part of the system are given by the
following equations:
Eyi;t2s 2 yi;t2s21 hi 1i;t 0
for s 1:
14
Exi;t2s 2 xi;t2s21 hi 1i;t 0
for s 1:
15
Using moment conditions (12) (15), and following Arellano & Bond (1991) and Arellano
& Bover (1995), the method applies the GMM procedure to generate consistent estimates
of the parameters of interest. The weighting matrix for GMM estimation can be any
symmetric, positive-definite matrix, and the most efficient GMM estimator is achieved by
applying the weighting matrix corresponding to the variance-covariance of the moment
conditions.
The consistency of the GMM estimator depends on whether the lagged values of the
explanatory variables are valid and adequate instruments in the regression. To determine
these conditions, two tests suggested by Arellano & Bond (1991) and Arellano & Bover
(1995) are taken into account. The first is a Sargan test of over-identifying restrictions,
which evaluates the overall validity of the instruments by analysing the sample analogue
of the moment conditions used in the estimation process. Failure to reject the null
hypothesis gives support to the model. The Sargan test is represented in the following
459
form:
N
1X
Z 0 eî e^0i Z i
s e^ Z
N t1 i
!21
Z 0i :e^
16
The second test examines the hypothesis that the error term (ni,t) is not serially correlated. I
tested whether the differenced error term (that is, the residual of the regression in
differences) is first- and second-order serially correlated. First-order serial correlation of
the differenced error term is estimated even if the original error term (in levels) is
uncorrelated, unless the latter follows a random walk. Second-order serial correlation of
the differenced residual shows that the original error term is serially correlated and follows
a moving average process of at least a first order. If the test fails to reject the null
hypothesis of absence of second-order serial correlation, it is concluded that the original
error term is serially uncorrelated and uses the corresponding moment conditions
(Arellano & Bond, 1991; Arellano & Bover, 1995).
3. Results
For cross-section regression analysis, the baseline model specification is the following:
ln V it a 2 nln GDPpcit 2 gln EDU it pln PRI it sln POV it
dln UEMPit jln GIN it lln UBN it 2 cln SALit
2 kln EMPI it hi nit :
17
For the GMM estimator, the model is the following:

ln V it a bln V it21 2 nln GDPpcit 2 gln EDU it pln PRI it
sln POV it lln UBN it jln GIN it 2 cln SALit
2 kln EMPI it ^ dln EMPit hi nit :
18
Note that Vit is the homicide rates in period t for city i; Vit21 is the lagged coefficient of the
homicide rate; GDPpcit is the aggregate-level production per capita by city; EDUit is
education by city; PRIit is prices by city; POVit is the poverty indicator by city; UBNit are
unsatisfied basic needs by city; GINit is the coefficient of the GINI index in period t by city;
SALit is the salary level by city; UEMPit is unemployment by city; EMPit is share of
working population by city; and EMPIit is the employment per industry in period t by city.
Tables 1 and 2 show the results of the regression models using a cross-sectional
regression analysis and a dynamic panel model for urban violence measured as homicide
rates by city. The tests applied in both models indicate that the results are robust. In the
case of cross-sectional analysis, a Breusch and Pagan test demonstrates a linear
relationship between the error variance and the regressors, and in the case of the dynamic
panel model the Sargan test of over-identifying restrictions does not reject the null
hypothesis that the instruments are not correlated with the error process.
The results thus indicate that the development level of the cities negatively influences
urban violence (i.e. a higher development level means less urban violence) according to
460
A. Cotte Poveda
Table 1. Estimation technique: cross-sectional regression analysis; dependent variable: violence

measured as homicide rate
Parameter
Constant
GDP
per capita
Education
Prices
Poverty
Unemployment
GINI
Unsatisfied basic
needs
Salaries real
Employments
per industry
Breusch-Pagan
test (P-value)
R-squared
Adj R-squared
No.
observations
[1]
[2]
[3]
[4]
[5]
[6]
[7]
5.171*** 5.863*** 6.004*** 7.128*** 7.031*** 6.926*** 6.882***

(0.935)
(0.956)
(0.955)
(1.047)
(1.057)
(1.058)
(1.048)
20.022* 20.037*** 20.039*** 20.039*** 20.041*** 20.041*** 20.039***
(0.012)
(0.013)
(0.013)
(0.013)
(0.013)
(0.013)
(0.013)
21.204*** 22.128*** 22.053*** 22.398*** 22.391*** 22.322*** 22.306***
(0.460)
(0.550)
(0.549)
(0.563)
(0.567)
(0.568)
(0.563)
0.333*** 0.404*** 0.379*** 0.382*** 0.391*** 0.387*** 0.390***
(0.039)
(0.045)
(0.046)
(0.046)
(0.046)
(0.046)
(0.046)
0.085*** 0.090*** 0.095*** 0.097*** 0.094*** 0.095***
(0.028)
(0.028)
(0.028)
(0.028)
(0.028)
(0.028)
0.188**
0.166**
0.154*
0.153*
0.152*
(0.084)
(0.084)
(0.084)
(0.084)
(0.084)
0.650**
0.610**
0.614**
0.599**
(0.254)
(0.256)
(0.256)
(0.253)
1.093
0.548
0.503
(1.549)
(1.587)
(1.572)
20.430
20.405
(0.277)
(0.275)
21.600***
(0.451)
1.000
1.000
1.000
1.000
1.000
1.000
1.000
0.216
0.212
630
0.227
0.222
630
0.233
0.227
630
0.241
0.234
630
0.248
0.239
623
0.251
0.241
623
0.266
0.255
623
Notes: Figures in parentheses are standard errors. ***Significant at the 1% level; **significant at the 5%
level; and *significant at the 10% level.
the cross-sectional model. In the case of the dynamic panel model, the results for the
lagged homicide rate show a positive and significant effect on homicide rates over time,
which concurs with the results of Fajnzylber et al. (2000) and Levinson (2002) regarding
violence in the Latin American context.
In both models, the results of economic variables measured as GDPpc and prices are
similar. In the first case, the results show that a higher GDPpc in a city leads to a lower
homicide rate. These results concur with Kick & Lafree (1985), Lin (2007), Sun et al.
(2010) and Cotte (2011b), who demonstrated that countries with higher GDPpc have
fewer homicides.
The estimation of prices shows a positive relationship such that an increase in prices
generates an increase in urban violence. As prices rise, more money is required to buy the
goods and services that were previously purchased at a lower value, which may increase
crime (Yearwood & Koinis, 2011).
The results for education indicate that cities with a more educated population have
lower homicide rates. Low education among the poor population may generate
unemployment, which in turn may increase the potential for crime and violence (Cole &
Marroquin, 2009). Moreover, the results herein concur with the country-level findings of
Fajnzylber et al. (2002) and with Santos et al. (2006) for a Brazilian city.
With respect to the results for social conditions measured as poverty, unsatisfied basic
needs and the GINI index, it was found that these variables have a direct relationship with
461
Table 2. Estimation technique: the Arellano Bover/Blundell Bond linear dynamic panel data
system GMM estimations; dependent variable: violence measured as homicide rate
Parameter
[1]
[2]
[3]
[4]
[5]
[6]
[7]
Constant
5.502***
(0.984)
0.683***
(0.025)
5.230***
(0.992)
0.680***
(0.025)
5.284***
(0.991)
0.677***
(0.025)
5.320***
(0.990)
0.678***
(0.025)
5.195***
(0.993)
0.676***
(0.025)
5.096***
(0.991)
0.670***
(0.025)
5.099***
(0.996)
0.670***
(0.026)
Lagged rate of
homicides
GDP per capita
Education
Prices
Poverty
GINI
Unsatisfied
20.018
20.026
20.032
20.031
20.034
20.034
20.033
(0.023)
(0.023)
(0.023)
(0.023)
(0.023)
(0.023)
(0.023)
22.297*** 22.677*** 22.519*** 22.533*** 22.431*** 22.436*** 22.423***
(0.485)
(0.516)
(0.529)
(0.529)
(0.532)
(0.530)
(0.537)
0.249***
0.277***
0.251***
0.251***
0.244***
0.247***
0.245***
(0.040)
(0.042)
(0.046)
(0.046)
(0.046)
(0.046)
(0.049)
0.078**
0.073**
0.073**
0.068*
0.078**
0.078**
(0.037)
(0.037)
(0.037)
(0.037)
(0.037)
(0.037)
0.361
0.355
0.377
0.381
0.384
(0.274)
(0.274)
(0.274)
(0.273)
(0.276)
0.930
0.522
0.530
0.532
(1.027)
(1.060)
(1.057)
(1.058)
basic needs
Salaries
20.306
(0.196)
Employments
20.289
(0.195)
20.712**
(0.326)
per industry
Employment
20.289
(0.196)
20.716**
(0.327)
Sargan test
0.380
0.424
0.411
0.395
0.423
0.432
20.035
(0.331)
0.444
(P-value)
Serial correlation
First order
Second order
No. observations
0.008
0.110
623
0.008
0.093
623
0.008
0.098
623
0.008
0.095
623
0.008
0.070
623
0.008
0.078
623
0.008
0.075
623
Notes: Figures in parentheses are standard errors. ***Significant at the 1% level; **significant at the 5%
level; and *significant at the 10% level.
homicide rates. Therefore, cities that are characterized by high poverty levels, unsatisfied
basic needs and inequality are likely to generate higher rates of crime and violence. These
results concur with the findings of McCall et al. (2008) in the context of US cities and
Nadanovsky & Cunha-Cruz (2009) in the context of developed and developing countries.
The findings for the labour market demonstrated a positive coefficient for the
unemployment rate and a negative coefficient for the employment rate, which suggests
that lower unemployment and higher employment generate lower incentives to participate
in criminal activity. This finding concurs with Hojman (2004), Robinson et al. (2009) and
Cotte (2011a).
Salaries and employment per industry have a negative coefficient, indicating that lowpaying work and limited work opportunities in individual industries are social
disadvantages that tend to promote crime and urban violence in Colombia. Similar
results were found by Lee & Slack (2008) and Yearwood & Koinis (2011) in the USA.
To understand the results of regression models using an alternative approach spatial
interpolation was applied. The natural neighbour algorithm uses a circular areal-based
procedure for interpolation. This approach allows us to determine the growth rate that
462
A. Cotte Poveda
captures the continuum of possible combinations among several decision variables. The
trilateral approach allows us to assess directly the growth rates in the level of violence that
could capture the continuum of possible combinations of education and employment, with
both regression planes and non-planar surfaces. This approach thus provides intuitive
answers to questions of how to interpret sets of coefficients from linear regressions and
more complex non-linear regressions.
The results show that education and employment affect positively the growth rate
violence. Likewise, poverty and inequality also have a positive effect on the violence
growth rate. A trilateral analysis with spatial interpolation can help us better to understand
the trends among variables by taking into account that the system dimensionality adjusts
with the variables that are used. To obtain the trilateral relationship, a reduction in the
dimensionality of the regression is necessary. I used the estimated coefficients for GDPpc
and education from the first column of Table 1, and then built a residual group that is
associated with the part that is not entirely explained by the violence equations. The
residuals are deployed against other variables in the tridimensional area and these
residuals are graphed in the tridimensional space against joint variables representing
poverty and inequality to construct a plan for the regression.
I used the robust plane, which is an ideal option when fitting data to a plane where
outliers are likely or suspected and a robust model is desired to lessen the impact of such
outliers on the overall fit, and the method of natural neighbour interpolation as introduced
by Watson (1994) to obtain a non-planar, three-dimensional surface depicting the
relationships between inequality, poverty and violence and between employment,
education and violence. This type of linear interpolation in natural neighbour coordinates
is the equivalent of planar interpolation in rectangular coordinates.
Figures 1 and 2 show the main variables for the seven major Colombian cities. Figure
1(a) displays two dimensions of projected surface. Figure 1(a), which is built with a robust
plane, indicates that the plane surface installed in the tridimensional space increases with
poverty and inequality; thus, the highest part of the surface shows the highest homicide
level when the poverty and inequality levels of cities are increased. Figures 1(b) and (c)
present a non-planar relationship between violence, poverty and inequality. In this figure,
the highest area represents the highest violence level associated with the poverty and
inequality levels. Figures 2(a) (c) show that an increase in education drives a lower
growth rate of violence. Likewise, the cities employment level shows the same trends.
Therefore, when the employment level is higher, the homicide growth rate should be
lower.
The results of this analysis suggest that factors such as inequality, poverty and
unemployment influence urban violence and negatively affect economic and social
development in seven major Colombian cities. This concurs with the results of several
studies such as Cotte (2007), Darby et al. (2004) and Ades & Chua (1997) that empirically
examined the relationships between political instability and economic growth and found
negative and significant relationship between these factors. All of these variables are
therefore important in the formulation of cities growth and development, though each
citys development level must also be taken into account. It is also important to consider
key strategies to improve economic growth and development with the goal of decreasing
urban violence in Colombia.

Violence, poverty and inequality in the cities
1.5
0.5
1
0
0.5
1
1.5
2
22
1.5
11
0.5
0
0.5
1
1.5
2
0.5
(b)
0.4
0.3
0
0.3 .3
0.4
0.5
0.6
0
0.7 .8
er ty
Pov
1
0.5
0
0.5
0.5
1
0.8
0.7
0.6
ty
0.5
er
0.4
ov
P
0.3
.3
0.5
1
5
0.
(c)
45
0.
Gini
0.
35
0.
22
1.5
11
0.5
0
0.5
1
1.5
2
1.5
0.5
0
0.5
1
Homicides
Homicides
Homicides
1.5
1.5
Homicides
0.4
Gin
i
Homicides
Homicides
(a)
1.5
0.5
0.4
Gin
i
0.4
0.3
0
0.3 .3
0.4
0.5
0.6
0
0.7 .8
er ty
Pov
Figure 1. Violence, poverty and inequality in the Columbian cities.
463
A. Cotte Poveda
Violence, employment and education in the cities
1.5
11
0.5
Homicides
0
0.5
1
0.
80 0
7 60
0.5 6
0
5
5 40
0.5
Ed
ent
0.4
30 0
uca
ym
5
o
tion 2 10 0 0.4
l
p
Em
(c)
1.5
0.75
0.5
0.25
00
0.25
0.5
0.75
1
0.75
0.5
0.25
0
0.25
0.5
0.75
1
0.
0.5 6
5
0
0
.
5
4 30
0.4
Ed
nt
20 10
uca
5
me
loy
tion
0 0.4
p
Em
80 70
Homicides
0.5
0
0.5
1
1.5
(b)
Homicides
Homicides
1.5
Homicides
(a)
60 50

0.75
0.5
0.25
0
0.25
0.5
0.75
1
0.75
0.5
0.25
0
0.25
0.5
0.75
1
80 70 0
6 50 0
Educ 4 30 20 0
ation
1
Homicides
464
0.6
0.55
t
0.5
en
m
0.45
oy
pl
0 0.4
m
E
Figure 2. Violence, employment and education in the Columbian cities.
465
4. Conclusions
This paper has analysed variations in urban violence among seven major Colombian cities
during the period 1984 2006 and examined how these variations influenced economic
development using several econometric data panel models and various estimate types to
control heterogeneity across the cities and to address endogeneity problems among the
explanatory variables. The tests used in this study demonstrate that the models are
adequate to generate consistent, robust and reliable estimates in the analysis of urban
violence.
In this study, two models were applied, cross-sectional regression analysis and GMM, to
analyse urban violence as measured by the homicide rate in each city. Both models show
similar results. In the first model, the results indicate that the cities development level
negatively influences urban violence (a higher development level results in lower urban
violence), and the results from the lagged homicide rate in the second model show a
positive and significant effect on urban violence over time.
With respect to the results incorporating the economic variables, education, social
conditions and the labour market, it was found that these variables are determinates of
Colombian urban violence and therefore also of development. Growth, education,
employment and salaries are found to decrease homicide rates, whereas poverty,
inequality, unemployment and prices increase crime and violence in Colombian cities.
The results from the spatial interpolation show that urban violence is positively
associated with poverty and inequality levels, whereas education and employment level
have a negative relationship with homicide rates, which concurs with previous empirical
analyses. The findings of this study demonstrate that inequality, poverty and
unemployment directly influence urban violence, generating negative effects on economic
and social development in the seven major Colombian cities. Thus, city-level homicide
rates in Colombia are influenced mainly by the citys level of development, its particular
social conditions and the tendency for urban violence to persist over time, as shown by the
strong positive relationship between the lagged and current homicide rate.
Each of these factors is therefore important in affecting cities growth and development.
Likewise, it is important to adopt strategies to improve economic growth and development
with the goal of decreasing urban violence in Colombia.
Note
1
The use of instrumental variables is required to address two issues. First, we can resolve the problem of
simultaneity and reverse causation caused by the likely endogeneity of the regressors used in this type of
equation. Second, we reduce the estimation bias caused by the underreporting of homicide rates.
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Appendix 1
Table A1. Descriptive statistics

Variables
Homicide rate
GDP per capita
Education
Poverty
Unsatisfied basic needs
Salaries real
Employments per industry
Unemployment rate
Prices
GINI
Mean
Standard deviation
Min
Max
2.591
19.794
1.943
13.251
2.961
12.832
4.159
2 2.030
2 0.871
2 1.091
0.604
2.747
0.101
1.044
0.288
0.166
0.359
0.278
1.142
0.110
1.014
12.274
1.715
9.715
2.444
12.401
3.355
2 0.312
2 3.123
2 1.494
4.245
24.974
2.186
15.279
3.600
13.358
4.836
21.469
0.567
20.941

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