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The Effect of Mafia on Public Transfers

Author

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  • Guglielmo Barone

    () (Economic Research Department, Branch of Bologna, Bank of Italy, Italy; RCEA, Italy)

  • Gaia Narciso

    () (Department of Economics, Trinity College Dublin, Ireland; CReAM, UK; IIIS, Ireland)

Abstract

Organised crime is widely regarded as damaging to economic outcomes. This paper analyses the impact of organized crime on the allocation of public subsidies to businesses. We assemble an innovative data set on Italian mafia at municipality level and test whether mafia diverts public funding. We exploit exogenous variation at municipality level to instrument mafia activity and show that the presence of organized crime positively affects the probability of obtaining funding and the amount of public funds. Mafia is also found to lead to episodes of corruption in the public administration sector. A series of robustness checks confirms the above findings.

Suggested Citation

  • Guglielmo Barone & Gaia Narciso, 2013. "The Effect of Mafia on Public Transfers," Working Paper series 34_13, Rimini Centre for Economic Analysis.
  • Handle: RePEc:rim:rimwps:34_13
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Annalisa Scognamiglio, 2015. "When the Mafia Comes to Town," CSEF Working Papers 404, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Kyriakos C. Neanidis & Maria Paola Rana, 2014. "Entrepreneurs, Risk Aversion and Dynamic Firms," Centre for Growth and Business Cycle Research Discussion Paper Series 190, Economics, The Univeristy of Manchester.
    3. Paolo Pinotti, 2012. "The Economic Costs of Organized Crime: Evidence from Southern Italy," Working Papers 054, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), UniversitĂ  Commerciale Luigi Bocconi.
    4. Daniele, Gianmarco & Dipoppa, Gemma, 2017. "Mafia, elections and violence against politicians," Journal of Public Economics, Elsevier, pages 10-33.
    5. Gianmarco Daniele, 2015. "Strike one to educate one hundred: organized crime, political selection and politicians’ ability," Working Papers 2015/37, Institut d'Economia de Barcelona (IEB).

    More about this item

    Keywords

    organized crime; public transfers; corruption;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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