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The Economic Costs of Organized Crime: Evidence from Southern Italy

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  • Paolo Pinotti

Abstract

I examine the post-war economic development of two regions in southern Italy exposed to ma a activity after the 1970s and apply synthetic control methods to estimate their counterfactual economic performance in the absence of organized crime. The synthetic control is a weighted average of other regions less a ected by ma a activity that mimics the economic structure and outcomes of the regions of interest several years before the advent of organized crime. The comparison of actual and counterfactual development shows that the presence of ma a lowers GDP per capita by 16%, at the same time as murders increase sharply relative to the synthetic control. Evidence from electricity consumption and growth accounting suggests that lower GDP re ects a net loss of economic activity, due to the substitution of private capital with less productive public investment, rather than a mere reallocation from the ocial to the unocial sector.

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Bibliographic Info

Paper provided by "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi in its series Working Papers with number 054.

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Length: 30 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:don:donwpa:054

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Keywords: organized crime; economic development; synthetic control methods;

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References

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  1. Thaler, Richard, 1978. "A note on the value of crime control: Evidence from the property market," Journal of Urban Economics, Elsevier, vol. 5(1), pages 137-145, January.
  2. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers 2001-11, Department of Economics, Williams College.
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  4. Freeman, Richard B., 1999. "The economics of crime," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 52, pages 3529-3571 Elsevier.
  5. Guglielmo Barone & Gaia Narciso, 2011. "The effect of mafia on public transfers," Trinity Economics Papers tep2111, Trinity College Dublin, Department of Economics.
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  7. Buonanno, Paolo & Durante, Ruben & Prarolo, Giovanni & Vanin, Paolo, 2011. "On the historical and geographic origins of the Sicilian mafia," MPRA Paper 37009, University Library of Munich, Germany, revised 01 Feb 2012.
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Citations

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Cited by:
  1. Buonanno, Paolo & Durante, Ruben & Prarolo, Giovanni & Vanin, Paolo, 2011. "On the historical and geographic origins of the Sicilian mafia," MPRA Paper 37009, University Library of Munich, Germany, revised 01 Feb 2012.
  2. Guglielmo Barone & Gaia Narciso, 2011. "The effect of mafia on public transfers," Trinity Economics Papers tep2111, Trinity College Dublin, Department of Economics.
  3. Graziano Abrate & Federico Boffa & Fabrizio Erbetta & Davide Vannoni, 2013. "Corruption, Accountability and Efficiency. An Application to Municipal Solid Waste Services," Carlo Alberto Notebooks 316, Collegio Carlo Alberto.
  4. Ando, Michihito, 2013. "Estimating the effects of nuclear power facilities on local income levels: A quasi-experimental approach," Working Paper Series 2013:3, Uppsala University, Department of Economics.
  5. Ho Fai Chan & Bruno S. Frey & Jana Gallus & Benno Torgler, 2013. "Does The John Bates Clark Medal Boost Subsequent Productivity And Citation Success?," QuBE Working Papers 004, QUT Business School.
  6. De Feo, Giuseppe & De Luca, Giacomo, 2013. "Mafia in the ballot box," SIRE Discussion Papers 2013-104, Scottish Institute for Research in Economics (SIRE).
  7. Saurabh Singhal & Rahul Nilakantan, 2012. "Naxalite Insurgency and the Economic Benefits of a Unique Robust Security Response," HiCN Working Papers 127, Households in Conflict Network.
  8. Francesco Bripi, 2013. "The role of regulation on entry: evidence from the Italian provinces," Temi di discussione (Economic working papers) 932, Bank of Italy, Economic Research and International Relations Area.
  9. Acconcia, Antonio & Immordino, Giovanni & Piccolo, Salvatore & Rey, Patrick, 2013. "Accomplice-Witness and Organized Crime: Theory and Evidence from Italy," CEPR Discussion Papers 9543, C.E.P.R. Discussion Papers.
  10. Guido de Blasio & Carlo Menon, 2013. "Down and out in Italian towns: measuring the impact of economic downturns on crime," Temi di discussione (Economic working papers) 925, Bank of Italy, Economic Research and International Relations Area.
  11. Lanzafame, Matteo, 2013. "Crime and regional growth in Italy," MPRA Paper 44343, University Library of Munich, Germany.
  12. Capuano, Carlo & Purificato, Francesco, 2012. "The macroeconomic impact of organized crime: a neo-Kaleckian perspective," MPRA Paper 40077, University Library of Munich, Germany.
  13. Jinjarak, Yothin & Noy, Ilan & Zheng, Huanhuan, 2013. "What Lessons Can Asia Draw from Capital Controls in Brazil during 2008–2012?," ADBI Working Papers 423, Asian Development Bank Institute.

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