Fiscally Responsible Mafia-clans

Sergio Beraldo, Massimo Bordignon (), Simone Pellegrino, Massimiliano Piacenza and Gilberto Turati ()

No 43, Working papers from Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino

Abstract: To work as an accountability mechanism, fiscal decentralization requires the democratic mechanism to function well. This is generally not the case where the quality of the institutional environment is weak, and local governments might be captured by local oligarchs. We explore this issue by studying how Italian municipalities reacted to an unexpected tax reform reducing tax autonomy at the local level. Focusing on three Southern provinces, where some municipal governments are captured by Camorra clans, our estimates suggest that captured municipalities are less responsive to incentives stemming from re-centralization. We also observe a different recomposition of spending between the two groups, which we interpret - according to our theoretical model - considering the different degrees with which clans can extract rents from public expenditure.

Keywords: Tax decentralization; Local government accountability; Institutional quality; Mafia-type organizations (search for similar items in EconPapers)
JEL-codes: D73 H40 H71 H72 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2017-10
New Economics Papers: this item is included in nep-eur and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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