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The Effect Of Mafia On Public Transfers

  • Guglielmo Barone

    ()

    (Bank of Italy, Economic Research Department, Branch of Bologna, Piazza Cavour 6, 40124, Bologna, Italy)

  • Gaia Narciso

    ()

    (Trinity College Dublin, CReAM and IIIS, Department of Economics, 3012 Arts Building, Dublin 2, Ireland)

This paper analyzes the impact of organized crime on the allocation of public transfers. We assemble an innovative data set on Italian mafia and public funds to businesses at municipality level and instrument current mafia activity with rainfall in the XIX century and geographical shifters of land productivity. We show that organized crime greatly increases the amount of public funds to businesses. Mafia is also found to lead to episodes of corruption in the public administration sector. Our results suggest that the design of geographically targeted aid policies should take into account local crime conditions.

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Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp398.

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Length: 37 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:iis:dispap:iiisdp398
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  10. Bernini, Cristina & Pellegrini, Guido, 2011. "How are growth and productivity in private firms affected by public subsidy? Evidence from a regional policy," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 253-265, May.
  11. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-71, September.
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