Every year, roughly 3,000 people are arrested while working as “mules” smuggling drugs through the ports of entry along the U.S.-Mexican border in California, Arizona, New Mexico, and Texas. For every mule caught, many more get through. Despite the great public concern over cross-border drug smuggling, and the enormous expenditures devoted to stopping it, little is known about the labor market mechanisms underlying this activity.
In a new IZA Discussion Paper, David Bjerk and Caleb Mason study this underground labor market using unique data from California with detailed information on smuggling events. The authors estimate that the average compensation of a mule caught at the California ports of entry is approximately 1,600 U.S. dollars. This implies that a drug mule would have to complete about two smuggling trips per month to earn as much as an American commercial truck driver.
Compensation for drug smuggling also responds to sentencing risk: one extra year in jail when caught increases the smuggler’s pay by around 1,200 dollars. Given harsher sentences for meth and cocaine, compensation for smuggling these drugs increases sharply with the quantity smuggled until a certain load size is reached where larger quantities make no difference in sentencing. Since expected prison time is much shorter for smuggling marihuana, mules’ pay in this case increases linearly: each additional 50 kilos pay about 420 dollars extra.
The authors conclude that this underground labor market is subject to competitive market pressures with risk-sensitive, reasonably informed workers being compensated for higher risks. Their findings also suggest that border enforcement and sentencing may impact the drug market not just through restricting the amount of drugs that come through the border, but by raising the price due to higher labor costs.