We analyze the effects of Mafia infiltration in the legal economy. Combining information from investigative records with panel data on firms’ governance and balance sheets, we build an indicator of infiltration in firms located in an area with no tradition of Mafia. We show that Mafia targets young and less efficient firms and that infiltration generates a significant rise in firms’ revenues, with no proportionate growth in production inputs and a deterioration of the firm’s financial situation leading to market exit. These findings are consistent with a story of predatory behavior in which infiltration is used for money laundering or rent extraction. (JEL D22, G32, G34, K42, L25)
We analyse the impact of exposure to corruption news on individuals' perceptions about the extent of the phenomenon. To this purpose, we take information on individuals' perceptions of the likelihood that corruption events may occur in everyday life and combine it with a dataset containing the number of news items related to corruption that appeared on the homepages of the websites of the 30 most widely read national and local newspapers on the day on which the individual was interviewed. Results show that increasing potential exposure to corruption news by one standard deviation causes an increase in corruption perception of about 3.5 per cent and a decrease in trust in justice effectiveness of about 5.2 per cent. We suggest that these effects are mainly driven by a persuasive mechanism rather than by a learning process so that individuals' perceptions about corruption appear to be biased by media content.
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