The effect of mafia on public transfers (original) (raw)

Organized crime and business subsidies: Where does the money go?

Journal of Urban Economics, 2015

Business support policies are widespread in advanced countries, to foster employment and productivity. This paper analyses the role of organized crime in the allocation of public subsidies to businesses. We assemble an innovative data set on the Italian mafia at municipality level and test whether mafia-ridden municipalities receive a disproportionally higher amount of funds. We exploit exogenous variation at municipality level to instrument mafia activity and show that the presence of organized crime positively affects the probability of obtaining funding and the amount of public funds. Organized crime is also found to lead to episodes of corruption in the public administration sector. A series of robustness checks confirms the above findings.

Organized crime and regional development. A review of the Italian case

Trends in Organized Crime, 2009

This paper offers a review of the effects of organized crime on regional economic development, with particular reference to the case of Italy. After reviewing the empirical studies that analyse the relationship between crime and economic development, the paper examines the regional distribution and the social costs of some crimes (in particular extortion) that can be linked to mafia type criminality. Jel: K42, K 49, R 59.

Economic structure and vulnerability to organised crime: Evidence from Sicily

Global Crime, 2008

The economic analysis of organized crime suggests that some economic activities are particularly vulnerable to penetration by criminal organizations. This paper provides an analysis of the structure of the Sicilian economy and shows that, when compared to other Italian regions, it is characterized by a disproportionate presence of such activities. In particular, the economy of Sicily appears characterized by: (i) a large dimension of traditional sectors, such as the Construction sector, which also has a strong territorial specificity; (ii) a large presence of small firms; (iii) a low level of technology; (iii) a large public sector. The joint presence of these features creates fertile soil for the typical activities of organized crime, such as extortion and cartel enforcement. Hence, we propose an alternative explanation of the persistence of organized crime with respect to explanations based on cultural and social factors.

Estimating a crime equation in the presence of organized crime: evidence from Italy

International Review of Law and Economics, 1997

We estimate a crime equation using a panel dataset of Italian regions for the period 1980 to 1989. Four different crimes are considered: murder, theft, robbery, and fraud. To take account of the presence of criminal organizations--a salient feature of the Italian context and a relevant factor usually disregarded by the empirical literature--we exploit the panel structure with unobservable individual components. Our results suggest that: (i) the probability of punishment is relatively more effective than both the severity of punishment and the efficiency of police authority in deterring crime; (ii) among the variables representing the opportunity costs of participating in illegal activities, the rate of unemployment, the value of public works started by government, and the proportion of people employed in the service sector have a significant effect; (iii) for three types of crime the regional unobservable component is correlated with the regressors; (iv) spillovers from drug consumption to theft are substantial; and (v) with the exception of fraud, the results are in contrast with the predictions of the standard economic model of crime. © 1997 by Elsevier Science Inc.

Organized Crime and Electoral Outcomes in Sicily

SSRN Electronic Journal, 2014

This paper investigates the relationship between mafia and politics by focusing on the market for votes. It exploits the fact that in the early 1990s the Italian party system collapsed, new parties emerged and mafia families had to look for new political allies. It presents evidence, based on disaggregated data from the Italian region of Sicily, that between 1994 and 2008 Silvio Berlusconi's party, Forza Italia, obtained higher vote shares in municipalities plagued by mafia. The result is robust to the use of different measures of mafia presence, both contemporary and historical, to the inclusion of different sets of controls and to spatial analysis. Instrumenting mafia's presence by determinants of its early diffusion in the late XIX century suggests that the correlation reflects a causal link, which would be coherent with mafia's choice to back Forza Italia in exchange for favorable policies.

Mafia’s infiltration and spillover effects in the construction sector

2019

Literature has mainly focused on understanding whether organized crime impacts on economic growth, broadly intended. Yet, at the local level, much little is known as to how crime may affect economic activities. Using a unique geo-localized dataset on Italian firms, we show that in municipalities where the city council is dismissed because of mafia infiltration, there is a reduction in the added value of firms located in neighboring municipalities, being this effect more marked for firms operating in the construction sector. We also find that the effect is larger the longer the presence of the organized crime in the municipal council.

Mafia Firms and Aftermaths

SSRN Electronic Journal

We use a unique and unexplored dataset to investigate the determinants and effects of mafia firms in Italy. Mafia may use several tools to expand its firms. However, in this paper, we show that they prefer political corruption to violence to expand mafia firms. In particular, they use the latter more to build up their reputation in new established regions. Mafia firms hamper entrepreneurial activity but they can have beneficial effects on unemployment if mafia firms add to not substitute current economic activities. Policy makers should take account of this twofold effects of mafia firms.

Mafia markers: assessing organized crime and its impact upon societies

Trends in Organized Crime, 2007

This study develops a causal model of the independent effect of organized crime, rule of law, and corruption on national wealth. To measure the level of organized crime a Composite Organized Crime Index (COCI) is constructed combining data on the perceived prevalence of organized crime, unsolved homicides, grand corruption, money-laundering and the extent of the black economy, drawing on the World Economic Forum's annual surveys among CEOs of larger companies, the Merchant International Group's assessments of investment risks in 150 countries, studies by the World Bank Institute, and official crime statistics. The findings of the explorative analysis show that a political strategy of tolerating activities of local criminal groups in the hope of beneficial effects on the wealth of a nation is unlikely to bring the expected results. Although some types of organized crime may bring in significant revenues, tolerating Mafia-type activities implies letting the Trojan horse of racketeering and grand corruption into the walls of government.

Organized crime and electoral outcomes. Evidence from Sicily at the turn of the XXI century

European Journal of Political Economy, 2016

This paper investigates the relationship between Sicilian mafia and politics by focusing on municipality-level results of national political elections. It exploits the fact that in the early 1990s the Italian party system collapsed, new parties emerged and mafia families had to look for new political allies. It presents evidence, based on disaggregated data from the Italian region of Sicily, that between 1994 and 2013 Silvio Berlusconi's party, Forza Italia, obtained higher vote shares at national elections in municipalities plagued by mafia. The result is robust to the use of different measures of mafia presence, both contemporary and historical, to the inclusion of different sets of controls and to spatial analysis. Instrumenting mafia's presence by determinants of its early diffusion in the late XIX century suggests that the correlation reflects a causal link.

Measuring the Presence of the Mafias in Italy

2014

ABSTRACT Despite the relevance of the mafias for the Italian society, official and academic attempts to measure the presence of the mafias in the country are scarce. This loophole may affect the quality of research and policies against the mafias. This chapter discusses the measurement and the mapping of different types of mafias developed by Transcrime for the Italian Ministry of Interior. It presents the mafia index, which measures the presence of the mafias at the municipal level for the period 2000–2011. Further, it analyses the presence of five main types of mafias (Cosa Nostra, Camorra, ‘Ndrangheta, Apulian organised crime and other mafias). Finally, it discusses implications for research and policy in Italy and other countries.