Health, Labor and Development Seminar - Gianmarco Daniele (Bocconi University)
Doing Business Below the Line: Screening, Mafias and European Funds
Criminal organizations’ ability to seize public funding has become one of criminals’ main sources of income. In this paper, we study mafias' appropriation of European funds and the effectiveness of a policy aimed at screening mafia-related firms out of the tender process. The existence of a discontinuity in the application of the law at 150,000 Euros only after 2013, allows us to precisely identify the effectiveness of this policy, by estimating how many firms sort at the threshold to avoid screening. We provide several pieces of evidence in line with the idea that firms sorting are likely to have connections with mafias. Additionally, we study how firms circumvent the policy using figureheads in areas in which mafias are a dominant force. Our study provides important insights on the effectiveness of strategies to fight misappropriation of public funds and organized crime.