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Essays on the Economics of Crime

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Essays on the Economics of Crime ESSAYS ON THE ECONOMICS OF CRIME Matteo Pazzona PhD University of York Department of Economics and Related Studies August 2012 1 Abstract The economic approach to crime issues is a recent field of research, which spawned from Becker’s (1968) seminal work. In this PhD thesis we contribute to the existing literature with three original research papers. The first paper deals with an under-explored field of research, namely the origins of the Sicilian Mafia. We follow an approach closer to that of historians such as Lupo (2004) and Pezzino (1987). In their work, Mafia was strictly linked with the socio and economic struggles amongst emerging classes which took place after the end of feudalism. We tested this hypothesis using a new measure of Mafia activity and new explanatory variables derived from previously under-explored primary sources. Our key findings are that Mafia was likely to be active in councils dominated by large properties, with high land values, lower density of population and where there were few peasants who owned the land. In the second paper, we explore the channels that favoured the expansion of Italian gangs in the centre and north of Italy in the second half of the XX century. We empirically investigate the role of forced re-settlement and migration through the creation of a panel dataset at the provincial level for the period 1983-2008, again using data from previously under-explored primary sources. Consistent with the community network approach (Bauer and Zimmermann, 1997; Moretti, 1999), we find that migration is by far the most important predictor of Mafia presence in the hosting provinces. In the final paper, we evaluate the impact of trust on crime in five Caribbean countries: Jamaica, Suriname, Guyana, Trinidad and Tobago and Dominican Republic. We use individual data taken from Americas Barometer for 2010, which contains information on victimization experiences. In order to tackle endogeneity we employ an instrumental variable approach. The results show that our measure of trust exerts a crime reducing effect on property but not violent crimes. As we argue in the introductory chapter, all three contributions could be considered in the light of the new institutional economics approach. In particular, both organised crime and social capital provide extra legal solutions to securing property rights. 2 Contents Abstract ...................................................................................................................................... 2 Contents ..................................................................................................................................... 3 List of Tables ............................................................................................................................. 6 Acknowledgments...................................................................................................................... 9 Declaration ............................................................................................................................... 10 Chapter 1: Introduction ............................................................................................................ 11 1.1 Introduction ....................................................................................................... 12 1.2 The New Institutional Economics: a selected review ........................................ 13 1.2.1 North’s view ............................................................................................................ 13 1.2.2 Coase and Williamson ............................................................................................. 14 1.2.3 Law and economics ................................................................................................. 16 1.2.4 Lawlessness and economics.................................................................................... 17 1.3 Summaries of the papers .................................................................................... 20 1.4 The New Institutional Economics in this context .............................................. 23 1.4.1 Papers on organised crime ..................................................................................... 23 1.4.2 Paper on trust and victimization in the Caribbean ................................................. 28 1.5 Conclusions ........................................................................................................ 30 Chapter 2: Emerging classes and the fight for resources: an empirical investigation into the origins of the Sicilian Mafia .................................................................................................... 32 2.1 Introduction and motivations ............................................................................. 33 2.2 Historical background and literature review ...................................................... 34 2.2.1 State failure ............................................................................................................. 35 2.2.2 The creation of the land market .............................................................................. 37 2.2.3 The eastern provinces ............................................................................................. 40 2.2.4 Related literature ..................................................................................................... 42 2.3 Data and results .................................................................................................. 44 2.3.1 Mafia measure ......................................................................................................... 44 2.3.2 Independent variables ............................................................................................. 50 2.3.3 Comparison with Bandiera (2003) .......................................................................... 52 2.4. Econometric specifications and results ............................................................. 53 2.4.1 Econometric techniques .......................................................................................... 53 2.4.2 Specifications .......................................................................................................... 55 2.4.3 Econometric concerns ............................................................................................. 56 2.4.4 Results ..................................................................................................................... 57 2.5. Sicily and Sardinia: a comparison..................................................................... 69 3 2.6. Conclusions ....................................................................................................... 76 2.7 Appendix ............................................................................................................ 78 2.7.1 Description of the variables .................................................................................... 78 Chapter 3: Migrating Mafia ..................................................................................................... 84 3.1 Introduction and motivations ............................................................................. 85 3.2 Literature review ................................................................................................ 88 3.2.1 Definition of organised crime ................................................................................. 88 3.2.2 Mafias ..................................................................................................................... 89 3.2.3 The Italian Mafias ................................................................................................... 90 3.2.4 Mafia transplantation: theory .................................................................................. 92 3.2.5 Mafia transplantation in Italy: a brief review ......................................................... 93 3.2.6 Factors that fostered Mafia transplantation ............................................................. 95 3.2.7 Migration................................................................................................................. 96 3.2.8 Confino (Forced re-settlement) ............................................................................. 102 3.3. Descriptive statistics ....................................................................................... 104 3.4. Econometric concerns and strategy ................................................................ 118 3.5. Results and robustness checks ........................................................................ 121 3.6. Conclusions and further research .................................................................... 140 3.7 Appendix .......................................................................................................... 142 3.7.1 Variables: definition and sources .......................................................................... 142 3.7.2 Tables .................................................................................................................... 144 3.7.3 Figures ................................................................................................................... 145 Chapter 4: Trust and victimization: evidence from five Caribbean countries ....................... 146 4.1 Introduction and motivations ..........................................................................
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