American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia
American Economic Review
vol. 114,
no. 7, July 2024
(pp. 2171–2200)
Abstract
This paper studies the long-run economic impact of dismissing city councils infiltrated by organized crime. Applying a matched difference-in-differences design to the universe of Italian social security records, we find that city council dismissals (CCDs) increase employment, the number of firms, and industrial real estate prices. The effects are concentrated in Mafia-dominated sectors and in municipalities where fewer incumbents are reelected. The dismissals generate large economic returns by weakening the Mafia and fostering trust in local institutions. The analysis suggests that CCDs represent an effective intervention for establishing legitimacy and spurring economic activity in areas dominated by organized crime.Citation
Fenizia, Alessandra, and Raffaele Saggio. 2024. "Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia." American Economic Review, 114 (7): 2171–2200. DOI: 10.1257/aer.20221687Additional Materials
JEL Classification
- D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
- H77 Intergovernmental Relations; Federalism; Secession
- K42 Illegal Behavior and the Enforcement of Law
- R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics