The Economic Effects of Mafia: Firm Level Evidence

2022/07/27 by Litterio Mirenda, Sauro Mocetti, Lucia Rizzica · 1 citation
Social Sciences · #Crime, Illicit Activities, and Governance #Culture, Economy, and Development Studies #Corruption and Economic Development

paper · doi:10.1257/aer.20201015

openalex publication_date 2022/07/27 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/02

Abstract

We analyze the effects of Mafia infiltration in the legal economy. Combining information from investigative records with panel data on firms’ governance and balance sheets, we build an indicator of infiltration in firms located in an area with no tradition of Mafia. We show that Mafia targets young and less efficient firms and that infiltration generates a significant rise in firms’ revenues, with no proportionate growth in production inputs and a deterioration of the firm’s financial situation leading to market exit. These findings are consistent with a story of predatory behavior in which infiltration is used for money laundering or rent extraction. (JEL D22, G32, G34, K42, L25)

Citations

• Organized crime and business subsidies: Where does the money go?
• Organised Crime, Institutions and Political Quality: Empirical Evidence from Italian Municipalities
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• Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program

Cited by

• Organized crime [wikipedia]