Clean evidence on dirty deeds

ended

Organized crime is systematically associated with lower economic development and higher corruption, political instability and political violence across countries. However, causal evidence on the economic and political effects of organized crime remains limited. The present proposal advances our knowledge of organized crime in two main directions. First, I will explore the effects of organized crime on the allocation and effectiveness of public spending, focusing on two important areas of government spending: public procurement and public subsidies to private firms. This analysis will advance our knowledge of the practices through which captured politicians can distort the allocation of resources in favour of criminal organizations, their implications for the efficiency of government intervention, and the effectiveness of alternative policy responses. Second, whilst previous research has focused almost exclusively on the traditional areas of origin of criminal organizations, I will study the effects of criminal groups moving to new regions and countries. I will focus in particular on three different contexts: i) the “transplant” of criminal organizations from southern to northern Italian regions; ii) interactions of immigrants and natives in criminal activity in the wake of recent migration to the Netherlands; and iii) the inflow of members of the Sicilian Mafia into the US during the period of alcohol prohibition (1920-1933). The present proposal will advance our understanding of how criminal groups can relocate to new regions and countries; their interactions with the criminal groups that may already be present there; and the economic and social effects in the areas of destination. From a methodological perspective, all projects will take advantage of unique micro-level data and state-of-the-art econometric methods for impact evaluation to provide clean evidence on causal relationships.