Marco Le Moglie

We show that the Mexican war on drugs pushed drug cartels into large-scale oil theft. We propose a simple model in which government crackdowns on one criminal sector induce criminal organisations to invest in a new sector. When entering the new sector, challenger organisations with a residual share of the market in the traditional sector may leapfrog incumbent organisations. We bring the model to the data using detailed information on drug cartel presence, oil pipelines and illegal oil taps across Mexican municipalities. In line with the model predictions, municipalities with oil pipelines witnessed a greater increase in cartel presence than municipalities without pipelines after the crackdown on drugs, and the effect is driven by challenger criminal groups. Within the subset of municipalities with oil pipelines, we observe more illegal oil taps where the political party in favour of anti-drug trafficking policy won local elections by a small margin. Because of specialisation in different criminal sectors, municipalities with pipelines did not witness a surge in violence, but they did experience a decline in socioeconomic conditions.

Media: VoxDev

Published: Economic Journal

Ungated: SSRN · CESifo WP

This paper extends the evidence on the impact of trade reforms on firms by focusing on non-tariff measures (NTMs), an increasingly important trade policy instrument in advanced and developing economies. We build a novel time-varying dataset on all NTMs applied to imported products by Indonesia and quantify the trade distortions they generate. We find that unlike tariffs, which reduce plants' productivity, NTMs do not significantly affect plants' performance. However, the most trade-reducing NTMs are associated with lower plant-level markups, which is consistent with the increase in the cost of imported inputs induced by these NTMs.

Published: Review of International Economics

Ungated: World Bank Policy Research WP 9654

In this paper, we study how a positive economic shock to an illicit industry might foster migration. In 2010, a series of reforms to the U.S. health care system resulted in a shift in demand from legal opiates to heroin. This demand shock had considerable effects on Mexico, the main supplier of heroin consumed in the United States. We exploit variation in potential opium production at the municipal level in a difference-in-differences (DID) framework, which compares Mexican municipalities with different amounts of opium-suitable land before and after 2010. We find that people fled out of municipalities more suitable for opium production, many to areas close to the U.S. border and into the United States. This is due to the increase in violence and conflicts, as municipalities more suitable for opium became highly valuable to drug cartels. Overall, almost 95,000 people migrate within Mexico and 22,000 emigrate to the United States.

Published: Journal of Development Economics

Ungated: SSRN · BAFFI WP

The article studies the long-term impact of corruption on trust toward institutions. Previous studies have demonstrated that exposure to corruption may lower institutional trust over the short term. Whether those short-term effects translate into a persistent effect is not known. We study the onset of a corruption shock that took place in Italy between 1992 and 1994. Using recent data collected by the Organization for Economic Cooperation and Development, we find that young first-time voters exposed to the corruption scandal and its political consequences in the early 1990s still today have significantly lower institutional trust and were more likely to choose populist parties at the 2018 national elections.

Media: Corriere della Sera · OPEN · Bocconi Knowledge 

Published: Journal of Politics

Ungated: PDF

We study the investment of organized crime in the legal economy. By using the shock induced on the Italian credit market by the 2007 subprime mortgage crisis, we document how provinces with a high organized crime presence have been affected less by the crisis in terms of the establishment of new enterprises than provinces with a lower criminal infiltration. We provide evidence that the lower impact of the crisis is consistent with the presence of investments by organized crime in the legal economy. We corroborate this interpretation by comparing our results with the characterization made by the judicial authority of such investments.

Media: Bocconi Knowledge · VoxEU · RES Media Briefings 

Published: Review of Economics and Statistics

Ungated: SSRN

Elections are crucial for legitimating modern democracies, and giving all candidates the possibility to run a proper electoral campaign is necessary for elections' success in providing such legitimization. Yet, during a pandemic, the risk that electoral campaigns would enhance the spread of the disease exists and is substantive. In this work, we estimate the causal impact of electoral campaigns on the spread of COVID-19. Exploiting plausibly exogenous variation in the schedule of local elections across Italy, we show that the electoral campaign preceding this latter led to a significant worsening of the epidemiological situation related to the disease. Our results strongly highlight the importance of undertaking stringent measures along the entire electoral process to minimize its epidemiological consequences.

Media: Domani

Published: European Journal of Political Economy

Ungated: arXiv

This study contributes to the literature on union dissolution by adopting a machine learning (ML) approach, specifically Random Survival Forests (RSF). We used RSF to analyze data on 2,038 married or cohabiting couples who participated in the German Socio-Economic Panel Survey, and found that RSF had considerably better predictive accuracy than conventional regression models. The man's and the woman's life satisfaction and the woman's percentage of housework were the most important predictors of union dissolution; several other variables (e.g., woman's working hours, being married) also showed substantial predictive power. RSF was able to detect complex patterns of association, and some predictors examined in previous studies showed marginal or null predictive power. Finally, while we found that some personality traits were strongly predictive of union dissolution, no interactions between those traits were evident, possibly reflecting assortative mating by personality traits. From a methodological point of view, the study demonstrates the potential benefits of ML techniques for the analysis of union dissolution and for demographic research in general. Key features of ML include the ability to handle a large number of predictors, the automatic detection of nonlinearities and nonadditivities between predictors and the outcome, generally superior predictive accuracy, and robustness against multicollinearity.

Media: Focus · La Repubblica

Published: Demography

Ungated: Open Access PDF

We investigate the link between personality traits (PTs) and fertility, accounting for the possible interplay with other key life course events. Using data from German Socio-Economic Panel survey, we build sequence-type representations of fertility, union and job careers between the ages of 20 and 40. We rely on multichannel sequence analysis (MSA) and on the Partitioning around Medoids algorithm to cluster individuals with similar experiences, and relate clusters to PTs via multinomial regression. We also develop a procedure to apply standard and MSA to truncated trajectories. This enables inclusion of individuals whose trajectories were otherwise observed for a limited age span, notably belonging to younger cohorts. We show that PTs relate to these (portions of) life-course trajectories, of which fertility is only one outcome.

Published: Journal of Royal Statistical Society - Series A

Ungated: Open Access  PDF

Recent studies argue that major crises can have long-lasting effects on individual behavior. While most studies focused on natural disasters, we explore the consequences of the global pandemic caused by a lethal influenza virus in 1918–19: the so-called “Spanish Flu.” This was by far the worst pandemic of modern history, causing up to 100 million deaths worldwide. Using information about attitudes of respondents to the General Social Survey, we find evidence that experiencing the pandemic likely had permanent consequences in terms of individuals' social trust. Our findings suggest that lower social trust was passed on to the descendants of the survivors of the Spanish Flu who migrated to the United States. As trust is a crucial factor for long-term economic development, our research offers a new angle from which to assess current health threats.

Media: VoxEU · National Review · Quartz · Bloomberg · AGI · La Repubblica · Crusoe

Published: Health Economics

Ungated: Open Access PDF · IGIER WP

Recent studies have shown higher uncertainty to be associated with fertility decline. This study considers the role of social trust as a coping mechanism when general uncertainty increases. We analyse the fertility data of Italian provinces from 2004 to 2013, thereby incorporating the period of economic recession, which unexpectedly and exogenously increased uncertainty across the population. We find a robust and significantly positive impact of social trust on fertility, which is stronger among younger age groups. Moreover, we find that the buffer effect of trust decreases with the level of public childcare provision, suggesting that low trust endowments may be counterbalanced through public policy.

Published: Population Studies

Ungated: Open Access  PDF

We investigate the existence of an ‘electoral cycle bias’ in the timing of media coverage of news with high political value. In particular, we analyze how the electoral cycles at the regional level influence the coverage of news about corruption scandals in the Italian Regional Health Systems by two important national newspapers having opposite ideology, La Repubblica (left-wing oriented) and Il Giornale (right-wing oriented). Our findings show that Il Giornale produces more articles about corruption scandals involving left-wing politicians in the days right before the elections, while it reduces the number of those about right-wing episodes of corruption and without any political connection. Instead, for La Repubblica we do not find any evidence of the existence of neither an electoral cycle, nor an ideological bias in the coverage of corruption. These results are robust to different model specifications, the potential endogeneity of some elections, and different measures of the time to the elections.

Published: Journal of Economic Behavior & Organization

Ungated: PDF

We investigate the role of individual labor income as a moderator of parental subjective well-being trajectories before and after the birth of the first child in Germany. Analyzing the German Socio-Economic Panel Survey (SOEP), we found that income matters negatively for parental life satisfaction after the first birth, though with important differences by education and gender. In particular, among better educated parents, those with higher income experience a steeper decrease in their subjective well-being. Income is measured as the average of individual labor income within 3 years before the birth. We provide evidence that our results are robust to potential endogeneity between income and first childbirth using the individual labor income at 3 years from the event, and for an alternative measure, i.e. the equivalent household income. Results are discussed in terms of different aspirations and difficulties parents may experience, especially in terms of work and family balance.

Published: Journal of Population Economics

Ungated: Institutional record

This paper analyses the role played by individual subjective well-being (SWB) in childbearing behavior. We use the German Socio Economic Panel (GSOEP) survey, which contains repeated information about SWB, childbearing events and, importantly, also measures of respondents’ personality, to estimate the way SWB matters for having a(nother) child, controlling for personality traits (PTs). We find that SWB positively predicts childbearing for women and men, with the effect significant (and sizeable) for both genders only for the second child. Furthermore, we assure that – although PTs are a strong component of SWB variability – the effect of SWB on fertility is not determined by PTs.

Published: Journal of Economic Behavior & Organization

Ungated: Carlo Alberto WP 

Local governments promise democratic responsiveness but are also vulnerable to political capture by illicit actors. While existing research documents the political and economic consequences of capture, less is known about how bureaucrats respond when political leadership is captured — whether they become instruments of corrupt rule or resist it. We examine these competing expectations in the context of Italian municipalities infiltrated by mafia organizations. Leveraging a law that allows the central government to dissolve captured municipal councils, we study how bureaucratic performance responds when political capture is abruptly removed. Using a difference-in-differences design with matched controls based on a machine-learning index of mafia-infiltration risk, we show that dissolutions substantially improve bureaucratic performance. Evidence from administrative data and investigative reports supports the interpretation that the lower performance during mafia rule was driven by bureaucrats resisting political capture. Our findings show that bureaucracies mitigate, rather than amplify, the downstream consequences of political capture.

Ungated: CESifo WP 12861 · CEPR DP 21805

Social norms play a critical role in society. This paper studies how difficult it is to manipulate social norms and whether efforts to do so may result in a backlash. We study the 1945 reform of primary education implemented under Franco’s regime in Spain, which promoted nationalist-religious values and emphasized women’s domestic roles. Exploiting plausibly exogenous variation in exposure between birth cohorts, we show that women exposed to the reform have fewer children and tend to reject the regime’s promoted gender norms. These findings highlight the unintended long-term consequences that state-led efforts to engineer social norms can generate.

Ungated: SSRN

Detection is one of the main challenges in the fight against organized crime. We show that machine learning can be used to predict mafias infiltration in Italian local governments, as measured by the dismissal of city councils infiltrated by organized crime. The model successfully predicts up to 96% of out-of-sample municipalities previously identified as infiltrated by mafias, up to two years earlier, making this index a valuable tool for identifying municipalities at risk of infiltration well in advance. Furthermore, we can identify "high-risk" local governments that may be infiltrated by organized crime but have not been detected by the state, thereby improving the efficacy of detection. We then apply this new time-varying measure of organized crime to investigate the underlying causes of this type of rent-seeking. As criminals infiltrate politics to capture public resources, we study how a positive shock in public spending (European Union transfers), affects this phenomenon. Employing a geographic Difference-in-Discontinuities design, we find a substantial and lasting increase in the predicted risk of mafia infiltration (up to 14 p.p.), emphasizing the unintended effects of delivering aid where criminal organizations can appropriate public funds.

Media: Slow News · VoxEU· Courrier International · Radio24 (8 Oct 2024) · Radio24 (9 Oct 2024) · l’Espresso · Rai · Wired Italia (Podcast)

Ungated: SSRN

The Value-Added Tax (VAT) is widely recognized as being inherently self-enforcing because it features third-party reporting and spread withholding along the production chain. However, a growing literature documents significant VAT tax gaps, sparking interest in possible improvements to VAT design. Reverse Charge (RC) is among the main examples: recently adopted by multiple countries to a variety of industries, RC shifts the entire tax payment on retailers, which, however, remain subject to third-party reporting. Leveraging administrative firm-level data from Italy and a quasi-experimental variation, we show that RC leads to an increase of reported value added (+20 percent). The effect of RC is present across the distribution of firm size although it is stronger among small firms and companies that used to bunch around the zero-liability tax kink. On these firms, RC limits the incentive to under-report sales. On the other end of the distribution of firm size, we document that RC increased reported value-added by limiting over-reporting of purchases.

Ungated: SSRN

We study the prevalence and effects of individuals with past criminal charges among candidates and elected politicians in Brazil. Individuals with past criminal charges are twice as likely to both run for office and be elected compared to other individuals. This pattern persists across political parties and government levels, even when controlling for a broad set of observable characteristics. Randomized anti-corruption audits reduce the share of mayors with criminal records, but only when conducted in election years. Using a regression discontinuity design focusing on close elections, we demonstrate that the election of mayors with criminal backgrounds leads to higher rates of underweight births and infant mortality. Additionally, there is an increase in political patronage, particularly in the health sector, which is consistent with the negative impacts on local public health outcomes.

Media: Folha de S.Paulo · VoxEU

Ungated: IZA DP 17328 · SSRN

This chapter explores interconnected theories that explain why organized crime develops in some areas rather than others, and discuss how criminal organizations can expand and migrate to new areas. Investigations of why criminal organizations arise are crucial for our understanding of how they shape our societies. Several scholars have tried to overcome inconsistencies in the economic and sociological explanations by adopting a more integrated institutional approach that shows how the rise of organized crime is significantly shaped by institutional incentives and disincentives. The numerous negative consequences that organized criminal violence may have on both economy and society make the understanding of why and when criminals turn to the use of violence of primary importance for all the actors aimed at fighting criminal organizations. The release of accurate administrative data will allow for a systematic adoption of evaluations to understand those policies that are more likely to counter organized crime in specific contexts.

Published: Routledge chapter