Socio-economic inequalities and organized crime: An empirical analysis

Abstract

In this chapter we contribute to the recent literature that provides evidence that inequality is high and social mobility is low in the Italian regions and provinces where organized crime is widespread such as those of Southern Italy. We provide a theoretical justification for these pieces of evidence and, by using a novel panel dataset at the regional level for the period 1985-2014, we investigate the relationship between inequality and organized crime at the regional level, and assess the role of social mobility in organized crime. Our main finding is that higher inequality leads to higher organized crime development. The results are robust for different organized crime measures and inequality indices. For all measures the ratio of 90th quintile over the 10th in the distribution is a strong predictor of organized crime, even if we control for other covariates that capture economic development, education etc. We also find that consumption inequality performs better that income inequality as the relevant inequality measure. Finally, we conduct a provincial level analysis to study the effect of socio-economic mobility on organized crime, using three alternative measures of social mobility. We find that lower socio-economic mobility display a robust association with organized crime development.