Events at CERGE-EI
Monday, 17 March, 2025 | 14:00 | Room 402 | Applied Micro Research Seminar
Federica Braccioli (Vienna University of Economics and Business) "The Institutional Role of the Italian Mafia: Enforcing Contracts when the State Does Not"
Vienna University of Economics and Business, Austria
Abstract: Italy has one of the slowest civil judicial systems in Europe. At the same time, there exists anecdotal evidence suggesting that informal contract enforcement can be provided by organized crime. I present a simple theoretical framework to explain why citizens may turn to the Mafia for contract enforcement when the State is increasingly unable to fulfil this service. I empirically test the main model prediction using a novel database of Mafiacontrolled areas across Italy between 2014 and 2019. I obtain confidential yearly data from the Superior Council of the Judiciary about the judge’s retirement, which I use as a source of exogenous variation in the State’s enforcement capacity. Results indicate that the Mafia expands its control over the territory when the State weakens its contract enforcement capacity.
Keywords: Contract enforcement, Criminal organizations, Mafia, Tribunals
JEL: P16, K40, H11
Full Text: The Institutional Role of the Italian Mafia: Enforcing Contracts when the State Does Not
