The Economic Costs of Organised Crime

I examine the post-war economic development of two regions in southern Italy exposed to ma?a activity after the 1970s and apply synthetic control methods to estimate their economic performance in the absence of organised crime. The comparison of actual and counterfactual development shows that the presence of ma?a lowers GDP per capita by 16%.

Paolo Pinotti, 2015, “The Economic Costs of Organised Crime: Evidence from Southern Italy”,The Economic Journal, 125 (August)

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8 years ago

Hmmm. But that lowering of GDP per capita is an average, yes ? For lots of those who are members of the mafia, their GDP per capita would actually be increased, wouldn’t it ?

And therefore it’s really just another inequitable distribution/market failure problem, isn’t it ?