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Law enforcement, municipal budgets and spillover effects: Evidence from a quasi-experiment in Italy

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  • Sergio Galletta

    () (IdEP, Economia, Universita' Svizzera italiana, Switzerland)

Abstract

In this paper, I empirically investigate the presence of spillover effects resulting from the strengthening of law enforcement against corruption and organized crime in local governments. Specifically, I take advantage of an Italian law that gives power to the central government to replace democratically elected municipal officials who are potentially connected with mafia with a commission of non-elected administrators. Fixed effects model estimates that focus on a sample of municipalities from three Italian regions (Campania, Calabria and Sicilia) for the period 1998 to 2013 show that the city council dismissal of a municipality fosters a reduction in public investments in neighboring municipalities. Additional empirical evidence suggests that this result could be explained by the presence of law enforcement spillovers potentially reducing misconducts in neighboring municipalities.

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  • Sergio Galletta, 2016. "Law enforcement, municipal budgets and spillover effects: Evidence from a quasi-experiment in Italy," IdEP Economic Papers 1601, USI Università della Svizzera italiana.
  • Handle: RePEc:lug:wpidep:1601
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    Cited by:

    1. Federico Cingano & Marco Tonello, 2020. "Law Enforcement, Social Control and Organized Crime: Evidence from Local Government Dismissals in Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(2), pages 221-254, July.
    2. Mariana Lopes da Fonseca, 2017. "Tax Mimicking in Local Business Taxation: Quasi-experimental Evidence from Portugal," Working Papers tax-mpg-rps-2017-08, Max Planck Institute for Tax Law and Public Finance.
    3. Daniele, Gianmarco & Galletta, Sergio & Geys, Benny, 2020. "Abandon ship? Party brands and politicians' responses to a political scandal," Journal of Public Economics, Elsevier, vol. 184(C).
    4. Gans-Morse, Jordan & Borges, Mariana & Makarin, Alexey & Mannah-Blankson, Theresa & Nickow, Andre & Zhang, Dong, 2018. "Reducing bureaucratic corruption: Interdisciplinary perspectives on what works," World Development, Elsevier, vol. 105(C), pages 171-188.
    5. Nicola Mastrorocco & Marco Di Cataldo, 2018. "Organised Crime, Captured Politicians and the Allocation of Public Resources," Trinity Economics Papers tep1219, Trinity College Dublin, Department of Economics, revised Oct 2019.
    6. Paolo Pinotti, 0. "The Credibility Revolution in the Empirical Analysis of Crime," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 0, pages 1-14.
    7. Anna Laura Baraldi & Giovanni Immordino & Marco Stimolo, 2020. "Mafia Wears Out Women in Power: Evidence from Italian Municipalities," CSEF Working Papers 586, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Nicola Mastrorocco, 2018. "Organised Crime, Captured Politicians and the Allocation of Public Resources," Trinity Economics Papers tep1018, Trinity College Dublin, Department of Economics, revised Jan 2019.
    9. Cavalcanti, Francisco & Daniele, Gianmarco & Galletta, Sergio, 2018. "Popularity shocks and political selection," Journal of Public Economics, Elsevier, vol. 165(C), pages 201-216.
    10. Stijn Baert & Sunčica Vujić & Simon Amez & Matteo Claeskens & Thomas Daman & Arno Maeckelberghe & Eddy Omey & Lieven De Marez, 2020. "Smartphone Use and Academic Performance: Correlation or Causal Relationship?," Kyklos, Wiley Blackwell, vol. 73(1), pages 22-46, February.
    11. Calamunci, Francesca M., 2020. "What Happens in Criminal Firms after Godfather Management Removal? Judicial Administration and Firms Performance," GLO Discussion Paper Series 698, Global Labor Organization (GLO).
    12. Marina Cavalieri & Massimo Finocchiaro Castro & Calogero Guccio, 2020. "Does the Fish Rot from the Head? Organised Crime and Educational Outcomes in Southern Italy," Working papers 97, Società Italiana di Economia Pubblica.
    13. Lavinia Piemontese, 2020. "Uncovering Illegal and Underground Economies: The Case of Mafia Extortion Racketeering," Working Papers 2025, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    14. Lavinia Piemontese, 2020. "Uncovering Illegal and Underground Economies: The Case of Mafia Extortion Racketeering," Working Papers halshs-02928546, HAL.
    15. Giuliano Masiero & Michael Santarossa, 2019. "Earthquakes, grants and public expenditure: how municipalities respond to natural disasters," IdEP Economic Papers 1901, USI Università della Svizzera italiana.
    16. Gamalerio, Matteo, 2020. "Do national political parties matter? Evidence from Italian municipalities," European Journal of Political Economy, Elsevier, vol. 63(C).
    17. Paolo Pinotti, 2020. "The Credibility Revolution in the Empirical Analysis of Crime," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(2), pages 207-220, July.
    18. Giuliano Masiero & Michael Santarossa, 2020. "Earthquakes, grants, and public expenditure: How municipalities respond to natural disasters," Journal of Regional Science, Wiley Blackwell, vol. 60(3), pages 481-516, June.

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    More about this item

    Keywords

    Horizontal interaction; Italy; Mafia; Corruption;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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