The Power of the Racketeer: An Empirical Approach
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Griffin Sims Edwards
Abstract
Using a quasi-maximum likelihood Poisson estimator with fixed effects, this paper tests a theory presented in Rubin (1973) that organized criminal firms extract monopoly rents from victim firms that gain monopoly power through the offering of goods and services in a non-native language. Using a US state panel and data on federal racketeering cases charged, I find that all else equal, a 0.1 percentage point increase in the amount of non-English speakers in a state will increase the expected number of racketeering cases per state per year by about 1. This is weakly supported by the fact that states with fewer small businesses, and thus a higher probability of earning monopoly rents, experience less racketeering activity.
Acknowledgments
The author would like to thank Paul Rubin, Sara Markowitz, David Frisvold, Joanna Shepherd Bailey, Josh Robinson, Erik Nesson, Doron Teichman, an anonymous referee, and the discussants at the Emory University Microeconomics lunches. All errors are my own.
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- 1
See 18 U.S.C. § 1961 for a list of what constitutes illegal activities.
- 2
See 18 U.S.C. § 1962 for a more detailed description of what it means to receive income.
- 3
Washington: Bill Summary & Status 113th Congress (2013–2014) S.AMDT.1151.
- 4
Extortion that comes from, sociologists would argue, other linguistic minority criminal firms. Rubin (1973) does not make this distinction however.
- 5
It may be possible that non-English speakers, in an effort to avoid criminal extortion, sort based on the preexisting trends in extortion in which case the direction of causality would be reversed. If this were true then lagged counts of racketeering charges should predict current rates of non-English speakers. There is no evidence of this relationship. Those results are available upon request.
- 6
The extent to which a measure of RICO charges overestimates the actual level of racketeering activity in state depends on the degree by which they plea mechanisms are employed.
- 7
This data comes from the National Association of Latino Elected and Appointed Officials Educational Fund.
- 8
Missing observations among these controls were linearly interpolated as necessary.
- 9
Available from https://www.aclu.org/courts
- 10
The preferred control would be that of small business owners who offer goods and services in a foreign language, but absent of that, this is a reasonable proxy. Missing values for this variable were inferred using a fixed effect model.
- 11
While it would perhaps be more insightful to unpack the non-English speaking population by language spoken and measure the effect of each language community, the aggregate of all non-English speakers is used because there is insufficient variation for identification off of any single language.
- 12
These results are available upon request.
©2014 by De Gruyter
Articles in the same Issue
- Frontmatter
- Articles
- Litigation with Default Judgments
- Addressing Federal Conflicts: An Empirical Analysis of the Brazilian Supreme Court, 1988–2010
- Cognitive Biases in Government Procurement – An Experimental Study
- Endogenous Detection of Collaborative Crime: The Case of Corruption
- The Power of the Racketeer: An Empirical Approach
Articles in the same Issue
- Frontmatter
- Articles
- Litigation with Default Judgments
- Addressing Federal Conflicts: An Empirical Analysis of the Brazilian Supreme Court, 1988–2010
- Cognitive Biases in Government Procurement – An Experimental Study
- Endogenous Detection of Collaborative Crime: The Case of Corruption
- The Power of the Racketeer: An Empirical Approach
