Organized crime generates about two percent of global GDP. While this is already a considerable share, the mafia and other groups of criminals might have an even higher economic impact by shaping the norms and attitudes of their surrounding societies, yielding potentially costly second-round effects.
In a new IZA Discussion Paper Stephan Meier, Lamar Pierce and Antonino Vaccaro compare the behavior of students from three schools in Palermo, Sicily. While one school is located in a neighborhood where police and government have strongly fought and successfully reduced the influence of the mafia, two other two schools are in an area where the mafia is still very active. The authors show that students from neighborhoods with high mafia involvement behaved significantly less cooperative, less trustworthy and more selfish in the laboratory experiments compared to students from two other areas. Interestingly, this pattern changed when the students knew with whom they were playing. In these situations, students from mafia neighborhoods cooperate much more since they know that a classmates benefits. In contrast, they are more selfish if they don’t know the beneficiary. The authors conclude that growing up in a culture of crime reduces general trust and biases trust toward in-group members.
On June 11, in the Hayek Auditorium of Cato Institute and in front of an audience of 200 people, IZA fellow and 2011 IZA Prize laureate 
International migration is a global phenomenon, widely studied in the literature. An important but less investigated issue concerns the role of immigration for the political preferences of the natives, who often have strong views and prejudices on the issue. These feelings are likely to be among the determinants of residents’ political choices at the polls. At the European institutional level the issue is even more important, since immigration policy is at the core of the debate on the future of the European Union. Interestingly, parties that are against the Euro area and that are proposing an exit strategy for their countries are often associated with protectionist views on immigration. The Front National in France, the Dutch Freedom Party and the Italian Lega Nord (Northern League) offer some examples of these combined political positions.
Most university students complete an internship while pursuing an academic degree: some work during the semester breaks, others even take a whole semester off to gain some work experience. In Germany, nearly 80 percent of all students had at least done one internship at the time they have graduated. The immediate benefits of interning seem obvious: students get hands-on experience in a potential future occupation and might even establish a link to a future employer. On the other hand, there are also some downsides: interns are often poorly paid and some firms exploit highly qualified students as cheap labor. This eventually raises the question: does it pay off to do an internship?
When homo economicus thinks about committing a crime, it’s all about balancing: the benefit of the crime against the disutility of potential future punishment. But the balancing is more complicated than that since the benefit of the crime is usually immediate, while the costs, such as some time in prison, have to been borne in the future. Hence, if potential criminals do not think much ahead and hardly value future events, the deterrent effect of punishment has no traction.
Although the end of World War II is not even seventy years ago, one out of five Germans thinks that Jews living in Germany should not have the same rights as Germans in every respect. Nearly as many think that foreigners should marry people of their own nationality. And 18% of the respondents would find it unpleasant if an Italian would marry into the family.
“Elterngeld” (literally: parents’ money) is among the most generous benefit payments in Germany. If a parent decides to stay at home with a newborn child, the government pays two-thirds of his or her recent monthly net income (up to a maximum of 1,800 euros) for one year. If both parents take a baby break for at least two months each, the benefit period is extended to a total of 14 months.
In many countries high school students visit job information centers before they graduate. They learn about job prospects, earnings and prerequisites of their desired job, as well as about local labor market conditions. This information is supposed to help teenagers choose their future occupation more wisely.
Today there are ten million immigrants living in Germany, accounting for 13 percent of the whole population. At the same time, immigrants often seem to perform relatively poorly in the labor market. This is also true for Germany, where even second-generation migrants face lower employment rates and earn substantially less than natives.