Homicide and land prices: A spatial analysis in Santiago de Cali

Since 2000, Cali has had the highest mean annual homicide rate among the major Colombian cities. The model of Mills (1972) is extended to include the homicide per commune (from 2005 to 2012) as a measure of social distance, and to quantify the effect of this phenomenon on land prices (mean appraisals). Using an annual panel, the estimates of the model — the family violence rate being the instrumental variable — show that an increase in the homicide rate of one unit reduces the appraisals by 1.6%. One plausible interpretation is that homicides operate as a regressive tax on property wealth in Cali because it is more concentrated in the communes of the lower socio-economic stratum, systematically expanding the intra-urban social distance.