Three essays on crime, corruption and clientelism
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This dissertation studies how organized crime and corruption can penetrate the legal economy. In the first chapter I document the infiltration of organized crime in public procurement auctions in the aftermath of natural disasters. I focus on recent earthquakes that occurred in Italy between 2008 and 2016 and I utilize investigative data on participation in procurement auctions of firms associated with the mafia (in short, "mafia firms''). I show that criminal firms increase their participation in public procurement auctions in emergency-designated municipalities, particularly after relief status is declared over. Emergency status leads to a temporary increase in monitoring efforts, but a permanent positive shock to affected municipalities' reconstruction budgets, thus explaining the lagged effect. Using information on awarding procedures, I show that after the emergency the participation of mafia firms increases only in auctions with minimum discretion, suggesting it is not the result of collusion with local administrators. In Chapter 2, I investigate whether windfalls from natural resources increase corruption and how this varies across countries with different institutions. I utilize leaked information on the beneficiaries of secret offshore entities to construct a measure of malfeasance. I find that countries respond to a rise in the price of the commodities they export with increased incorporation of offshore entities in tax havens. However, such a relationship exists only for autocratic regimes. In Chapter 3, I develop a theoretical model to explain the role of political brokers in mediating clientelistic transactions between parties and voters. Brokers enjoy an informative advantage over parties: they observe the electorate's political preferences as well as their need for a private good (hospital beds) provided by the government. A party hires the broker to make a deal with the voters. The broker insures them against the risk of not receiving the private good when in need (sick) in exchange for their vote. The presence of the broker reduces aggregate welfare if parties focus on the electoral benefits coming from the provision of the private good and thus reduces the amount of public good (schools) below the optimal level. On the other hand welfare increases if private goods are delivered to citizens in need who would have not received them, had the broker not been present.
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