Organised Crime, Captured Politicians and the Allocation of Public Resources
68 Pages Posted: 25 Feb 2018 Last revised: 13 Apr 2020
Date Written: April 2020
What is the impact of organised crime on the allocation of public resources and on tax collection? This paper studies the consequences of collusion between members of criminal organisations and politicians in Italian local governments. In order to capture the presence of organised crime, we exploit the staggered enforcement of a national law allowing the dissolution of a municipal government upon evidence of collusion between elected officials and the mafia. We measure the consequences of this collusion by using newly collected data on public spending, local taxes and elected politicians at the local level. Difference-in-differences estimates reveal that infiltrated local governments spend more on average for construction and waste management, less for municipal police, and collect fewer taxes for waste and garbage. In addition, we uncover key elements of local elections associated with mafia-government collusion.
Keywords: organised crime, collusion, public spending, Italy
JEL Classification: K42, H72, D72
Suggested Citation: Suggested Citation