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

Author

Listed:
  • 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 re-elected. 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, 2023. "Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia," NBER Working Papers 32002, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32002
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    Cited by:

    1. Baraldi, Anna Laura & Papagni, Erasmo & Stimolo, Marco, 2024. "Neutralizing the tentacles of organized crime. Assessment of the impact of an anti-crime measure on mafia violence in Italy," Journal of Economic Behavior & Organization, Elsevier, vol. 223(C), pages 57-85.
    2. Arellano-Bover, Jaime & De Simoni, Marco & Guiso, Luigi & Macchiavello, Rocco & Marchetti, Domenico J. & Prem, Mounu, 2024. "Mafias and Firms," SocArXiv sr6ep, Center for Open Science.
    3. Baraldi, Anna Laura & Cantabene, Claudia & De Iudicibus, Alessandro, 2023. "Fighting crime for improved recycling: evaluating an anti-mafia policy on source separation of waste," MPRA Paper 120296, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • P0 - Political Economy and Comparative Economic Systems - - General

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