Paolo Buonanno

Does Social Capital Reduce Crime

We investigate the effects of civic norms and associational networks on crime rates. Civic norms may attach guilt and shame to criminal behavior, thus increasing its opportunity cost. Associational networks may increase returns to noncriminal activities and raise detection probabilities, but they may also work as communication channels for criminals and may offer official cover to criminal activities. The empirical assessment of these effects poses serious problems of endogeneity, omitted variables, measurement error, and spatial correlation. Italy’s great variance in social and economic characteristics, its homogeneity in policies and institutions, and the availability of historical data on social capital in its regions allow us to minimize the first two problems. To tackle the last two problems, we use report‐rate‐adjusted crime rates and estimate a spatial lag model. We find that both civic norms and associational networks have a negative and significant effect on property crimes across Italian provinces.

Poor Institutions, Rich Mines: Resource Curse and the Origins of the Sicilian Mafia

This study explains the emergence of the Sicilian mafia in the XIX century as the product of the interaction between natural resource abundance and weak institutions. We advance the hypothesis that the mafia emerged after the collapse of the Bourbon Kingdom in a context characterized by a severe lack of state property-right enforcement in response to the rising demand for the protection of sulfur - Sicilys most valuable export commodity - whose demand in the international markets was soaring at the time. We test this hypothesis combining data on the early presence of the mafia and on the distribution of sulfur reserves across Sicilian municipalities and find evidence of a positive and significant effect of sulphur availability on mafias diffusion. These results remain unchanged when including department fixed-effects and various geographical and historical controls, when controlling for spatial correlation, and when comparing pairs of neighboring municipalities with and without sulfur.

Education and crime: evidence from Italian regions

This study examines the impact of education on criminal activity in Italy. A number of hypotheses are tested regarding the effects of education and past incidence of crime on criminal activity, using annual data for the 20 Italian regions over the period 1980 to 1995. Empirical results show that education is negatively correlated with delinquency and that crime rates display persistence over time. The results are robust to model specifications and endogeneity.

Efficiency and Equity of Emissions Trading with Endogenous Environmental Technical Change

In recent years, particularly the last one, there have been many attempts to quantify the costs of implementing the Kyoto agreement under different policy options, i.e. with or without different degrees of introduction of the so-called ‘flexibility mechanisms’ (Emissions Trading, Joint Implementation, Clean Development Mechanisms).1 Despite the high variability, all estimates show that the Kyoto flexibility mechanisms significantly reduce the costs of compliance. Shogren (1999) notes that ‘it is estimated that any agreement without the cost flexibility provided by trading will at least double the US costs, ... the key is to distribute emissions internationally so as to minimise the costs of climate policy’. Manne and Richels (1999) state that ‘losses in 2010 are two and one-half times higher with the constraint on the purchase of carbon emissions rights; international co-operation through trade is essential if we are to reduce mitigation costs’. These are just two examples of the many studies reaching the same conclusion: emissions trading, and more generally flexibility mechanisms, can achieve a reduction in overall mitigation costs without reducing the effectiveness of the climate policy (see also Rose and Stevens, 1999; Bosello and Roson, 1999; Hourcade, Ha-Duong, and Lecocq, 1999; Tol, 1999). The same conclusion can also be achieved independently of the specific climate model adopted.

Crime and Labour Market Opportunities in Italy (1993-2002)

This paper investigates the relationship between labour market conditions and crime in Italy accounting for both age and gender in unemployment measure and considering regional disparities between North-Centre and South of Italy. Using regional data over the period 1993-2002, we study the impact of wages and unemployment on different types of crime. To mitigate omitted-variables bias we control extensively for demographic and socioeconomic variables. Empirical results suggest that unemployment has a large and positive effect on crime rate in southern regions. Our results are robust to model specification, endogeneity, changes in the classification of crimes and finally, to alternative definitions of unemployment.

Emission Trading Restrictions with Endogenous Technological Change

In this paper we use a simple climate model with endogenous environmental technical change in order to analyse the effects on equity and efficiency of different degrees of restrictions on trade in the market for pollution permits. The model is obtained by incorporating in Nordhaus and Yang (1996)’s RICE model and the notion of induced technical change as proposed in Goulder and Mathai (1998). With the help of such a model we aim at assessing the pros and cons of the introduction of ceilings on emission trading. In particular, we analyse the implications of restrictions on trading both in terms of their cost effectiveness and in terms of their distributional effects. The analysis takes into account the role of environmental technical change that could be enhanced by the presence of ceilings on trading. However, this effect is shown to be offset by the increased abatement cost induced by the larger than optimal adoption of domestic policy measures when ceilings are binding. Hence, our analysis provides little support in favour of quantitative restrictions on emission trading even when these restrictions actually have a positive impact on technical change. Even in terms of equity, ceilings find no justification within our theoretical and modelling framework. Indeed, we find that flexibility mechanisms in the presence of endogenous technical change increase equity and that the highest equity levels are achieved without ceilings, both in the short and in the long run.

Early Labour Market Returns to College Subject

We estimate early labour market outcomes of Italian university graduates across college subjects. We devote great attention to endogenous selection issues using alternative methods to control for potential self-selection associated with the choice of the degree subject in order to unravel the causal link between college major and subsequent outcomes in the labour market. Our results suggest that ‘quantitative’ fields (i.e. Sciences, Engineering, and Economics) increase not only the speed of transition into the first job and employment probability but also early earnings, conditional on employment.

Thank you for not smoking: Evidence from the Italian smoking ban

By 2030, tobacco is expected to be the cause of about 10 million deaths per year worldwide. In Italy tobacco smoking is still a pervasive and relevant phenomenon. Using data from a national health survey, we investigate how individuals react to the introduction of a public smoking ban in Italy. Our estimates suggest that the Italian smoking ban in private places open to the public reduced smoking prevalence by 1.3% and daily cigarettes consumption by 8%. We find heterogeneous effects by gender, marital status, and region of residence.

Crime in Europe and the United States: Dissecting the ‘Reversal of Misfortunes’

Contrary to common perceptions, today both property and violent crimes (with the exception of homicides) are more widespread in Europe than in the United States, while the opposite was true thirty years ago. We label this fact as the ‘reversal of misfortunes’. We investigate what accounts for the reversal by studying the causal impact of demographic changes, incarceration, abortion, unemployment and immigration on crime. For this we use time series data (1970-2008) from seven European countries and the United States. We find that the demographic structure of the population and the incarceration rate are important determinants of crime. Our results suggest that a tougher incarceration policy may be an effective way to contrast crime in Europe. Our analysis does not provide information on how incarceration policy should be made tougher nor does it provide an answer to the question whether such a policy would also be efficient from a cost‐benefit point of view. We leave this to future research.

Advocatus, Et Non Latro? Testing the Supplier-Induced-Demand Hypothesis for Italian Courts of Justice

We explore the relationship between litigation rates and the number of lawyers, in a typical supplier-induced demand (SID) frame. Drawing on an original panel dataset for the 169 Italian courts of justice between 2000 and 2007, we first document that the number of lawyers is positively correlated with different measures of litigation rate. Then, using an instrumental variables strategy we find that a 10 percent increase of lawyers over population is associated with an increase between 1.6 to 6 percent in civil litigation rates. Thus, our empirical analysis supports the SID hypothesis for the Italian lawyers: following an increase in their relative number, lawyers may exploit their informational advantage to induce clients to access to courts even when litigation is unnecessary or ineffective.