Once Upon a Time in America: the Mafia and the Unions

Abstract

With the emergence of the Italian-American mafia, labor racketeering became one of the most lucrative criminal activities. The Mafia infiltrated several labor unions, controlling labor and restricting competition. We identify places and industries that were more likely to be infiltrated, and show that in such places individuals of Italian origin rooted in Palermo, the cradle of La Cosa Nostra, climbed up to leadership positions, and later were more likely to be prosecuted. In response to the likely support of workers of Italian origin, these workers started earning significantly more than other European immigrants. This suggest that the Mafia was not only using violence to control labor but was paying them rents too.