Buonanno et al. on Organized Crime and Social Capital Formation

Paolo Buonanno, Irene Ferrari, and Alessandro Saia (University of Bergamo, Ca' Foscari University of Venice, Department of Economics, Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) and University of Lausanne) have posted All is Not Lost: Organized Crime and Social Capital Formation on SSRN. Here is the abstract:

 

We investigate how a disruptive social event, namely the emergence of organized crime infiltration in the local government, shapes social capital. We exploit the dismissal of city councils infiltrated by organized crime and a novel and fine-grained measure of social capital in Italy. Using a difference-indifferences strategy, we show that municipalities’ dissolution is associated with a significant and sizable increase in social capital. We document the mechanisms through which the presence of organized crime affects social capital, including trust diversion, changes in civic engagement, and its impact on local institutions and governance.