Estimating the economic costs of organized crime by synthetic control methods

Abstract

Summary The economic costs of organized crime have been estimated for the case of southern Italy by Pinotti ( Economic Journal 2015; 125 , F203–F232, 2015): using synthetic control methods, he finds that, due to the advent of the Italian Mafia in the regions Apulia and Basilicata, GDP per capita dropped by 16%. Replicating this study in a narrow sense by estimating the same model with the same data, but using different software implementations, we observe minor differences stemming from the different implementations. By identifying the correct implementation, we find that the loss in GDP per capita due to the presence of the Mafia has been slightly overestimated.