Returns to education in criminal organizations: Did going to college help Michael Corleone?

Is there any return to education in criminal activities? This paper is one of the first to investigate whether education has not only a positive impact on legitimate, but also on illegitimate activities. We use as a case study one of the longest running criminal corporations in history: the Italian-American mafia. Its most successful members were capable businessmen, orchestrating crimes that required abilities that might be learned at school: extracting the optimal rent when setting up a racket, weighting interests against default risk when starting a loan sharking business or organizing supply chains, logistics and distribution when setting up a drug dealing system. We address this question by comparing mobsters to a variety of samples drawn from the United States 1940 Population Census, including a sample of their closest (non-mobster) neighbors. We document that mobsters have one year less education than their neighbors on average. We find that mobsters have significant returns to education of 7.5–8.5% , which is only slightly smaller than their neighbors and 2–5 percentage points smaller than for U.S.-born men or male citizens. Mobster returns were consistently about twice as large as a sample of Italian immigrants or immigrants from all origin countries. Within that, those charged with complex crimes including embezzlement and bookmaking have the highest returns. We conclude that private returns to education exist even in the illegal activities characterized by a certain degree of complexity as in the case of organized crime in mid-twentieth century United States

Rationalizable Suicides: Evidence from Changes in Inmates’ Expected Length of Sentence

Is there a rational component in the decision to commit suicide? Economists have been trying to shed light on this question by studying whether suicide rates are related to contemporaneous socioeconomic conditions. This paper goes one step further: we test whether suicides are linked to forward-looking behavior. In Italy, collective sentence reductions (pardons) often lead to massive releases of prisoners. More importantly, they are usually preceded by prolonged parliamentary activity (legislative proposals, discussion, voting, etc.) that inmates seem to follow closely. We use the legislative proposals for collective pardons to measure changes in the inmates’ expectations about the length of their sentences, and find that suicide rates tend to be significantly lower when pardons are proposed in congress. This suggests that, among inmates in Italian prisons, the average decision to commit suicide responds to changes in current expectations about future conditions. At least partially, therefore, the decision seems rationalizable

Uncovering the Gender Participation Gap in Crime

Research on the gender variation in the crime market, a peculiar labor market for illegal activities, is limited, although the issue is relevant per se and for its policy implications. We document a gender gap in criminal activities, based on property and white collar crimes, using data from the U.S. National Incident Based Reporting System. We show that there is a gender participation gap where around 30 percent of the crimes are committed by females. In order to explain, at least in part, the gender participation gap we investigate whether there are differences in incentives to be involved in criminal activities and in responsiveness to these incentives across gender. In particular we focus on criminal earnings and probability of arrest. We show that on average females earn 18 percent less than males while they face the same likelihood of arrest. We find that females are more responsive to changes in the expected probability of arrest, while males respond more to changes in the expected illegal earnings. The fact that females behave differently than males has implications for the heterogeneity in response to crime control policies. In addition, using a Blinder-Oaxaca type decomposition technique, we find that differences in incentives explain about 12 percent of the gender crime gap, while differences in responsiveness explain about 55 percent of the gap

The causal effect of trade on migration: Evidence from countries of the Euro-Mediterranean partnership

In the attempt to reduce migration pressure, since 1995, the European Union has been planning to establish a free trade area with developing countries bordering the Mediterranean Sea. The process is still ongoing. Our paper tests whether it is likely to be an effective policy. We estimate a gravitational model of bilateral migrations on bilateral exports from the Mediterranean Third Countries (South) to the European Union (North) over the period 1970–2000, using different specifications. We find, in line with most of the literature, a significantly positive correlation (called “complementarity”) between exports and migrations from the South to the North. Then we go one step further, trying to solve the potential endogeneity problem using average trade tariffs and bilateral exchange rate volatility as instruments for trade. Based on the OLS as well as the 2SLS results, liberalizing trade in the area of the Euro-Mediterranean partnership does not seem to be an effective policy to mitigate the migration flows, at least in the short run

The role of museums in bilateral tourist flows: Evidence from Italy

This paper estimates the causal relationship of supply of art on domestic tourist flows. To this aim, we use aggregate bilateral data on tourist flows and various data on museums in the twenty Italian regions. To solve the potential endogeneity of the supply of museums, we use three different empirical strategies: we use a fixed effects model controlling for bilateral macro-area dummies, we compute the degree of selection on unobservables relative to observables which would be necessary to drive the result to zero and, finally, we adopt a two-stage least squares approach that uses a measure of historical patronage, the number of noble families, as an instrument for the number of museums. For each empirical strategy, there is strong evidence of a positive effect of the number of ‘net-museums’ on bilateral tourist flows