Essays in Economics and Institutions

This dissertation incorporates institutional analysis in the examination of a number of questions that are relevant for the economic literature, touching on issues of public policy, demography, transition, and organized crime. It is composed of three chapters that can be read separately. First, I evaluate the nexus between public works expenditures in post-war Italy and internal migration. Using nonlinear differences-in-differences, I present evidence that one of the goals of the Cassa per il Mezzogiorno—mitigating out-migration from the South of Italy—was, at best, a failure, and possibly exacerbated the problem. This evaluation is relevant for public policy that aims to address differentials between regions. Next, I re-examine the common finding that institutional quality is a determinant of foreign direct investment (FDI) in the context of transition economies. Using various measures of institutional quality, I find that more parsimonious and more commonly used models in evaluating FDI suggest that the previous findings are sensitive to specification. While this should not be considered as falsification of the notion that institutional quality is important in attracting FDI, it is a cautionary tale for those attempting to incorporate institutional measures in their work. Finally, after a careful consideration of the institutional environment of the Mafia in Italy, I propose a simple game-theoretic model to explain violence as an equilibrium outcome in such organizations