By Nadia Campaniello, Rowena Gray & Giovanni Mastrobuoni.
"Highlights
• We estimate the returns to education of Italian–American
mobsters using the 1940 Census to be close to 8% per year.
• Such returns are similar to those of white men of similar
age living in the same neighborhood and are larger than those of immigrants, of
Italian immigrants, and of US residents of Italian descent.
• We find that mobsters involved in illegal businesses, like
racketeering, loan sharking, bookmaking, etc., exhibit the largest returns to
education.
Abstract
Is
there any return to education in criminal activities? This paper is one
of the first to investigate whether education has not only a positive
impact on legitimate, but also on illegitimate activities. We use as a
case study one of the longest running criminal corporations in history:
the Italian-American mafia. Its most successful members were capable
businessmen, orchestrating crimes that required abilities that might be
learned at school: extracting the optimal rent when setting up a racket,
weighting interests against default risk when starting a loan sharking
business or organizing supply chains, logistics and distribution when
setting up a drug dealing system. We address this question by comparing
mobsters to a variety of samples drawn from the United States 1940
Population Census, including a sample of their closest (non-mobster)
neighbors. We document that mobsters have one year less education than
their neighbors on average. We find that mobsters have significant
returns to education of 7.5–8.5% , which is only slightly smaller than
their neighbors and 2–5 percentage points smaller than for U.S.-born men
or male citizens. Mobster returns were consistently about twice as
large as a sample of Italian immigrants or immigrants from all origin
countries. Within that, those charged with complex crimes including
embezzlement and bookmaking have the highest returns. We conclude that
private returns to education exist even in the illegal activities
characterized by a certain degree of complexity as in the case of
organized crime in mid-twentieth century United States."
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