The article investigates the effect of crime on firm entry rates in Italian provinces over the period 2007-2016. The extant literature focuses mainly on the relationship between crime and the sorting of new businesses. The present paper contributes to this stream of work by estimating the causal effect of crime on the overall propensity to engage in entrepreneurial activities across a national territory. We measure the extent to which property and violent crime affect firm entry rates using a novel instrumental variable approach in which the instrument for criminal activity is the effective abortion rate. Our findings suggest that crime has a negative impact on firm entry and that property crime has a stronger effect than crimes of violence. The results are robust to alternative instrumental variables and firm entry indicators. This empirical exercise emphasises the need to consider loss of new business activities as a downstream effect when computing the social costs of crime.
About the speaker
Ugo Rizzo is an assistant professor at the Department of Economics and Management of the University of Ferrara, Italy. He obtained an MSc at Manchester Business School and the title of Doctor Europaeus (PhD) at the University of Ferrara. His research interests are in the field of economics of innovation and particularly in university-industry relations, entrepreneurship and also environmental innovation.
Venue: via Zoom
Date: 07 October 2020
Time: 12.00 - 13.00