Organized crime and business subsidies: Where does the money go?

Guglielmo Barone () and Gaia Narciso

Journal of Urban Economics, 2015, vol. 86, issue C, 98-110

Abstract: Business support policies are widespread in advanced countries, to foster employment and productivity. This paper analyses the role of organized crime in the allocation of public subsidies to businesses. We assemble an innovative data set on the Italian mafia at municipality level and test whether mafia-ridden municipalities receive a disproportionally higher amount of funds. 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. Organized crime is also found to lead to episodes of corruption in the public administration sector. A series of robustness checks confirms the above findings.

Keywords: Business subsidies; Organized crime; Public transfers; Corruption (search for similar items in EconPapers)
JEL-codes: H4 K4 O17 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (76)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:86:y:2015:i:c:p:98-110

DOI: 10.1016/j.jue.2015.01.002

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