We examine the impact of corruption on workforce selection and personnel allocation in the public sector. Using Italian data, we find that the selection of public employees in terms of human capital ...worsens in comparison to that of their private sector counterparts in areas with higher levels of corruption. Moreover, corruption is associated with educational mismatch in the allocation of human resources and, in particular, with an increase in the rate of under-qualification. These results are robust to several alternative indicators and specifications, including IV estimation using past dependence on public spending and the historical relevance of foreign domination as exogenous sources of variation for current corruption.
What determines violent reaction during state formation processes? To address this question, we exploit the uprisings that occurred when southern Italy was annexed to Piedmont during Italian ...unification in the 1860s. We assemble a novel dataset on episodes of brigandage, a form of violent rebellion against the unitary government, and on pre-unification social and economic characteristics of southern Italian municipalities. We find that the intensity of brigandage is
ceteris paribus
lower in and close to settlements of Piedmontese origin. We argue that geographical distance from these communities is a proxy for cultural distance from the Piedmontese rulers. Thus, our results suggest that, in the context of state formation, cultural proximity to the new ruler reduces social unrest by local communities. After ruling out alternative mechanisms consistent with the economic literature, we provide suggestive evidence of cultural persistence and diffusion in our context, and discuss two possible culture-based drivers of our results: social identification with the Piedmontese rulers, and a clash between local values and some specific content of the new institutions.
What determines violent reaction during state formation processes? To address this question, we exploit the uprisings that occurred when southern Italy was annexed to Piedmont during Italian ...unification in the 1860s. We assemble a novel dataset on episodes of brigandage, a form of violent rebellion against the unitary government, and on pre-unification social and economic characteristics of southern Italian municipalities. We find that the intensity of brigandage is ceteris paribus lower in and close to settlements of Piedmontese origin. We argue that geographical distance from these communities is a proxy for cultural distance from the Piedmontese rulers. Thus, our results suggest that, in the context of state formation, cultural proximity to the new ruler reduces social unrest by local communities. After ruling out alternative mechanisms consistent with the economic literature, we provide suggestive evidence of cultural persistence and diffusion in our context, and discuss two possible culture-based drivers of our results: social identification with the Piedmontese rulers, and a clash between local values and some specific content of the new institutions.
Abstract
Public procurement outcomes depend on the ability of the procuring agency to select well-performing suppliers. Should public administrations be granted more or less discretion in their ...decision-making? Using Italian data on municipal public works tendered in the period 2009–13, we study how a reform extending the scope of bureaucrat discretion affects supplier selection. We find that the share of contracts awarded to politically connected firms increases while the (ex ante) labor productivity of the winning firm decreases, thus suggesting a potential misallocation of public funds. The results are heterogeneous across procuring agencies: the effects on supplier selection are primarily concentrated among less qualified and less transparent administrations. (JEL D72, D73, H57, P16)
Abstract
This paper investigates how private information affects the joint determination of the payment method and the bid premium in M&As. The focus is on the uncertainty of the stand‐alone ...valuations of the firms involved in the transaction induced by their
opacity
. First, we model M&A negotiations as a signalling game with two‐sided private information and derive correlations between firm opacity and bid characteristics from equilibrium analysis. Then, we analyze a sample of U.S. deals, using an index based on market measures of adverse selection to quantify firm opacity. We find that the likelihood of stock offers and the bid premium increase with the target's opacity, while more opaque bidders are associated with fewer stock offers and smaller bid premiums.
In a context characterized by upcoming regulatory changes and deeply affected by the COVID-19 epidemic, this paper examines the diffusion of firm undercapitalization (i.e., the firm displaying a ...level of equity below the legal limit) among Italian corporations. In a proposal by the National Board of Accountants, business crisis is substantially identified with undercapitalization. Indeed, our analyses show that the onset of undercapitalization often anticipates business termination: around 60 percent of involved firms go out of business within 3 years. In 2010-18, on average around 8.5 percent of Italian companies were undercapitalized. The impact of the COVID-19 epidemic may be substantial: our predictions indicate that the share of undercapitalized firms at the end of 2020 may exceed 12 percent. This estimate incorporates the powerful mitigating effects of several interventions enacted by the Italian government between March and August 2020 to support firms damaged by the pandemic. The increase in undercapitalization may reverberate onto the functioning of the new ‘early warning’ system, which will become operational in September 2021: our predictions suggest that the number of firms that could be involved in early warning procedures may be almost twice as large as that foreseeable on the basis of accounting data from 2018.
What determines violent reaction during state formation processes? To address this question, we exploit the uprisings that occurred when southern Italy was annexed to Piedmont during Italian ...unification in the 1860s. We assemble a novel dataset on episodes of brigandage, a form of violent rebellion against the unitary government, and on pre-unification social and economic characteristics of southern Italian municipalities. We find that the intensity of brigandage is ceteris paribus lower in and close to settlements of Piedmontese origin. We argue that geographical distance from these communities is a proxy for cultural distance from the Piedmontese rulers. Thus, our results suggest that, in the context of state formation, cultural proximity to the new ruler reduces social unrest by local communities. After ruling out alternative mechanisms consistent with the economic literature, we provide suggestive evidence of cultural persistence and diffusion in our context, and discuss two possible culture-based drivers of our results: social identification with the Piedmontese rulers, and a clash between local values and some specific content of the new institutions.
What determines the rejection of exogenously imposed institutions? To address this question, we exploit the transplantation of institutions that occurred when southern Italy was annexed to Piedmont, ...during the Italian unification process of the 1860s. We assemble a novel dataset on episodes of brigandage, a form of violent uprising against the unitary government, and on pre-unification social and economic characteristics of southern Italian municipalities. We find that the intensity of institutional rejection is ceteris paribus lower in and close to settlements of Piedmontese origin. We argue that geographical distance from these communities is a proxy for cultural distance from the Piedmontese rulers. Thus, our results suggest that cultural proximity to the ‘donor’ reduces institutional rejection by ‘recipient’ communities in the context of institutional transplantations. We rule out alternative mechanisms proposed by the economic literature, provide suggestive evidence of cultural persistence and diffusion in our context, and discuss two possible culture-based interpretations of our results: a clash between local values and the content of the new institutions, and social identification with the Piedmontese rulers.
Project duration is an important metric in the assessment of public works procurement and consists of the time taken to complete the three major sub-phases (design, awarding and execution). The ...overall duration may be influenced by various factors such as project characteristics, local market conditions, and the features of the contracting authority. Italy is characterized by stark territorial differences, potentially encompassing all the above dimensions. This paper uses granular data on Italian procurement to investigate public works’ completion times in the last decade. We unveil performance differentials across macro-areas and analyze possible drivers. We find that i) Southern regions underperform with respect to those in the Centre-North, in particular in phases characterized by a greater intensity of administrative tasks; ii) durations are significantly correlated with the features of the contracting authority, such as workforce composition, workload and experience, and administrative efficiency; iii) these factors, however, explain the North-South divide only partially, suggesting the need to further analyze the internal functioning of contracting authorities.
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