Does the Fish Rot from the Head? Organised Crime and Educational Outcomes in Southern Italy

This paper explores the relationship between the presence of organised crime in government institutions and the educational outcomes achieved by primary school students undertaking the INVALSI test in Italy. To this purpose, we employ a contemporary index of mafia institutional infiltration that proxies the (scale of) values that parents transmit to their children and that are likely to impact on their educational achievements. Furthermore, combining contemporary individual-level educational outcomes with historical data on mafia infiltration, we control for endogeneity concerns through an IV strategy. Focusing on the outcomes obtained in the INVALSI tests and controlling for results manipulation, we show that the lowest test performance can be found in the southern regions of Italy, where the presence of organised crime is the highest. We interpret this result as a rational choice of families and students living in provinces affected by the presence of organised crime due to the lower expected returns to investment in education. The results are robust to the use of different measures of organised crime, to the inclusion of different sets of controls, different subsamples and to relaxing the exclusion restriction in the IV strategy.