The Value of Connections: Evidence from the Italian-American Mafia

This study uses declassified data on US mafia members of the 1950s and 1960s to estimate the criminal network effect on their economic status. I measure economic status exploiting detailed information about their place of residence. Housing values are reconstructed using current deflated transactions data. I deal with non-random sampling of mobsters modelling investigations on connections as Markov chains. Reverse causality between economic status and the gangster's position in the network is solved exploiting exogenous exposure to pre-immigration connections. A standard deviation increase in closeness centrality increases economic status by between one-quarter and three-quarters of a standard deviation.