Hindering human capital accumulation: A hidden cost of the silent mafia?

Abstract

Since the 1970s, mafias have embedded outside South Italy though employing steadily less violence in establishing their illegal business. Could this rooting and social adaptation in the most productive areas of the country impair human capital accumulation? We provide evidence of a decline in human capital in those areas that were initially wealthy and innovative before mafias established their presence and influence. Our estimates suggest that, for the top 75% of mafia-infiltrated provinces, a reduction by 25 percentiles in their position within the mafia ranking could increase the number of university graduates per capita by 4–21%.