The Market for Mules: Risk and Compensation of Cross-Border Drug Couriers

This paper uses a unique dataset to examine the economics of cross-border drug smuggling. Our results reveal that loads are generally quite large (median 30 kg), but with substantial variance within and across drug types. Males and females, as well as U.S. citizens and non-U.S. citizens are all well represented among mules. We also find that mule compensation is substantial (median $1,313), and varies with load characteristics. Specifically, for mules caught with cocaine and meth, pay appears to be strongly correlated to expected sentence if caught, while pay appears to be primarily correlated with load size for marijuana mules, who generally smuggle much larger loads than those smuggling cocaine and meth. We argue that our results suggest that this underground labor market generally acts like a competitive labor market, where a risksensitive, reasonably well-informed, and relatively elastic labor force is compensated for higher risk tasks. *Thanks to Shawn Bushway, Jonathan Caulkins, Peter Reuter, John Pfaff, Eric Helland, and participants at the Conference for Empirical Legal Studies and the University of Houston/Rice Seminar on Applied Empirical Microeconomics for helpful comments and suggestions on this project.