All is not lost: Organized crime and social capital formation

Paolo Buonanno, Irene Ferrari and Alessandro Saia

Journal of Public Economics, 2024, vol. 240, issue C

Abstract: We investigate how institutional quality influences social capital by exploiting a policy designed to fight organized crime in Italy: the dismissal of city councils following criminal infiltration into local governments. To measure social capital, we employ a novel, fine-grained indicator based on Italy’s 5 per Mille provision, which allows taxpayers to allocate a portion of their income tax to non-profit organizations. Using a difference-in-differences strategy, we find that city council dismissals lead to a significant increase in social capital. We document that the perceived strengthening of law enforcement is the primary mechanism through which city council dismissals enhance social capital.

Keywords: Organized crime; Social capital; Italy; 5 per Mille (search for similar items in EconPapers)
JEL-codes: A13 D73 H71 K42 Z18 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:240:y:2024:i:c:s0047272724001932

DOI: 10.1016/j.jpubeco.2024.105257

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