DP12530 Weak States: Causes and Consequences of the Sicilian Mafia
We document that the spread of the Mafia in Sicily at the end of the 19th century was in part shaped
by the rise of socialist Peasant Fasci organizations. In an environment with weak state presence, this
socialist threat triggered landholders, estate managers and local politicians to turn to the Mafia to resist
and combat peasant demands. We show that the location of the Peasant Fasci is significantly affected by
an exceptionally severe drought in 1893, and using information on rainfall, we establish the causal effect
of the Peasant Fasci on the location of the Mafia in 1900. We provide extensive evidence that rainfall
before and after this critical period has no effect on the spread of the Mafia or various economic and
political outcomes. In the second part of the paper, we use the source of variation in the location of the
Mafia in 1900 to estimate its medium-term and long-term effects. We find significant and quantitatively
large negative impacts of the Mafia on literacy and various public goods in the 1910s and 20s. We also
show a sizable impact of the Mafia on political competition, which could be one of the channels via
which it affected local economic outcomes. We document negative effects of the Mafia on longer-term
outcomes (in the 1960s, 70s and 80s) as well, but these are in general weaker and often only marginally
significant. One exception is its persistent and strong impact on political competition.
