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

Alessandra Fenizia and Raffaele Saggio

No 32002, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: H5 J08 P0 (search for similar items in EconPapers)
Date: 2023-12
New Economics Papers: this item is included in nep-lab, nep-law and nep-ure
Note: LS
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Published as Alessandra Fenizia & Raffaele Saggio, 2024. "Organized Crime and Economic Growth: Evidence from Municipalities Infiltrated by the Mafia," American Economic Review, vol 114(7), pages 2171-2200.

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