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Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia

Author

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  • Alessandra Fenizia
  • Raffaele Saggio

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.

Suggested Citation

  • Alessandra Fenizia & Raffaele Saggio, 2024. "Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia," American Economic Review, American Economic Association, vol. 114(7), pages 2171-2200, July.
    • Handle: RePEc:aea:aecrev:v:114:y:2024:i:7:p:2171-2200
    DOI: 10.1257/aer.20221687
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    References listed on IDEAS

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    Cited by:

    1. Buonanno, Paolo & Ferrari, Irene & Saia, Alessandro, 2024. "All is not lost: Organized crime and social capital formation," Journal of Public Economics, Elsevier, vol. 240(C).
    2. Randi Hjalmarsson & Stephen Machin & Paolo Pinotti, 2024. "Crime and the labor market," CEP Discussion Papers dp2044, Centre for Economic Performance, LSE.
    3. Michael C. Knaus & Henri Pfleiderer, 2026. "Causal Graphs for Conditional Parallel Trends," Papers 2604.12818, arXiv.org.
    4. Valentina Chiariello & Oguzhan C. Dincer, 2026. "An Unholy Alliance: The Relationship Between Organized Crime and Corruption in Italy," CESifo Working Paper Series 12474, CESifo.
    5. Massimo Anelli & Paolo Pinotti & Zachary Porreca, 2025. "The Departed: Italian Migration and the American Mafia," RFBerlin Discussion Paper Series 25165, ROCKWOOL Foundation Berlin (RFBerlin).
    6. Hjalmarsson, Randi & Machin, Stephen & Pinotti, Paolo, 2024. "Crime and the labor market," Handbook of Labor Economics,, Elsevier.
    7. Cao, June & Huang, Zijie & Kristanto, Ari Budi, 2025. "From bytes to blooms: Tech-driven transformation and green revenues," Energy Economics, Elsevier, vol. 144(C).
    8. Simon Freyaldenhoven & Christian B. Hansen & Jorge Pérez Pérez & Jesse M. Shapiro & Constantino Carreto, 2024. "Policy Effect Estimation and Visualization in Linear Panel Event-Study Designs: Introducing the xtevent Package," Working Papers 2024-09, Banco de México.
    9. Gianmarco Daniele & Marco De Simoni & Domenico J. Marchetti & Giovanna Marcolongo & Paolo Pinotti, 2025. "A loan you can't refuse: credit rationing and organized crime infiltration of distressed firms," BAFFI CAREFIN Working Papers 25255, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    10. Alessandro Sovera, 2025. "When Integration Backfires: Examining the Effects of Mandatory Inter-Municipal Cooperation on Local Housing Markets," Working Papers 40, Finnish Centre of Excellence in Tax Systems Research.
    11. Carrillo, Paul E. & Contreras, Ivette & Scartascini, Carlos, 2024. "Turn off the faucet: Can individual meters reduce water consumption?," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    12. Marco Castelluccio & Lucia Rizzica, 2025. "Mafia infiltrations in times of crisis: evidence from the Covid-19 shock," Temi di discussione (Economic working papers) 1502, Bank of Italy, Economic Research and International Relations Area.
    13. Emma Duchini & Victor Lavy & Stephen Machin & Shqiponja Telhaj, 2025. "Personnel policy in public sector organizations: evidence from England's academy schools," CEP Discussion Papers dp2129, Centre for Economic Performance, LSE.
    14. Huang, Qing & Jiao, Jing, 2026. "Local government competition, financial regulation, and embezzlement crime," Finance Research Letters, Elsevier, vol. 89(C).
    15. Tian, Hao & Wang, Da & Guan, Yunfang & Li, Xiaotong, 2025. "Climate risk, social resilience and crime rates," Energy Economics, Elsevier, vol. 152(C).
    16. Davide Cipullo & Massimiliano Gaetano Onorato & Gianmario Pelleschi, 2026. "Organized Crime, Hidden Pollution, and Long-run Health Costs," CESifo Working Paper Series 12644, CESifo.
    17. Andrea Mario Lavezzi & Marco Quatrosi, 2025. "Go Green Without the Mafia! Dissolution of Infiltrated City Councils and Environmental Policy," Papers 2507.18410, arXiv.org.
    18. Fabrizia Mealli & Javier Viviens, 2025. "Difference-in-Differences in the Presence of Unknown Interference," Papers 2512.21176, arXiv.org, revised Feb 2026.
    19. repec:crm:wpaper:2624 is not listed on IDEAS

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    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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