By including municipality and year fixed effects, we are effectively controlling for factors that are constant in time for any given municipality and constant across counties for any given year. The underlying assumption for this model to be correctly specified is that there are no omitted time-varying municipality specific characteristics that are correlated with our violence variables.

One potential mechanism of an impact of violence on total enrollments in the municipality schools is migration. If those municipalities most affected by increasing violence presented a change in migration patterns (assuming an increase in migration, which would imply a negative effect on population) this would cause a decrease in the number of students.

To test this, we first run regressions of the form specified in Equation (1) including municipality and year fixed effects but use total population and other demographic municipality characteristics as our dependent variable _yit_ . By using demographic characteristics as our dependent variables we analyze whether the homicide rate appears to be affecting total population and its composition.

Second, we use age specific enrollment rates calculated from Census and a labor force survey (the _Encuesta Nacional de Ocupación y Empleo, ENOE_ ) to test whether the homicide-rate has affected the share of individuals attending school, as opposed to the actual number of students. This empirical strategy allows us to address migration concerns; to the extent that violence-induced migration is not selective on propensity to education, migration would not affect this result. Of course, it is quite possible that certain types of families are more likely to migrate (i.e. high socio economic status families). However, as we will see, we find that there is no impact of violence on enrollment rates, so it seems that this is not the case.

Other potential mechanism that could confound the effects of violence on enrollment rates at the municipality level is the potential reinsertion into school of former labor force participants who lost their employment or their desire to find a job due to the negative effects of violence in the local economy, as this would cause either higher enrollment rates or higher rates of idleness. Previous studies for Mexico that include Arias and Esquivel (2013), Velásquez (2014) and Dell (2014) show that drug-related homicides increased unemployment and labor force participation, particularly for women. However, these authors only study the effects at the mean and do not provide estimates of potential differentiated effects of violence on labor market outcomes by age group, and thus this effect may not be driven by the school aged population. We test whether this phenomenon may be causing an increase in enrollment rates.

To test for these potential confounding effects, we estimate the model defined in Equation (1) (with municipality and year fixed effects) using as our dependent variable _yit_ , first, the employment rate, and second, the rate of idle-youth, those in the 15 to 24 age range who are neither in school nor in the labor market. We further divide these rates by gender and also by smaller groups (12-14, 15-17, 18-20 and 21-24 years of age) to identify if any trends correspond to changes in enrollment rates in lower- and upper-secondary school. By using idle-youth and employment rates as our dependent 13