By Jetson Leder-Luis and Anup Malani

Data from the Department of Housing and Urban Development (HUD) indicate an unprecedented 43 percent increase in the number of people residing in homeless shelters in the United States between 2022 and 2024, reversing the gradual decline over the preceding sixteen years. Threequarters of this rise was concentrated in four localities – New York City, Chicago, Massachusetts, and Denver – where large inflows of new immigrants seeking asylum were housed in emergency shelters. Using direct estimates from local government sources and indirect methods based on demographic changes, we estimate that asylum seekers accounted for about 60 percent of the twoyear rise in sheltered homelessness during this period, challenging media and policy narratives that primarily attribute this rise to local economic conditions and housing affordability.

WORKING PAPER · NO. 2025-45

Chicago: University of Chicago, The Becker Friedman Institute for Economics, 2025. 21p.

By Mark Galeotti

Time of Troubles is the first comprehensive assessment of the impact of the Ukraine war on the Russian underworld. The war’s human and economic costs, along with the political retrenchment of a regime under growing pressure, are all transforming illegal markets and organized crime in Russia with potentially destabilizing effects. The annexation of Crimea in 2014 and the subsequent undeclared conflict in the Donbas region had already begun to reshape the Russian underworld. The 2022 invasion of Ukraine, however, brought dramatic changes. An almost complete split between Ukrainian and Russian criminal groups has had a significant negative impact, not least because of their dominance over transnational narcotics flows. At the same time, new opportunities to smuggle sanctioned luxury goods for the rich and critical components for the defence–industrial complex have enriched and elevated other gangs, especially those able to exploit and control routes through Belarus, Armenia and Central Asia. All this is putting pressure on the underworld status quo – and the state’s capacity to manage and maintain it – and even reshaping the relationship between Russian criminal networks and their partners and subsidiaries abroad. Even when the war does end, some form of sanctions or trade and investment controls will almost certainly remain in place. The Kremlin will find it difficult to integrate large numbers of traumatized, impoverished and disillusioned veterans, many of whom risk drifting into organized and disorganized crime. Condemned to pariah status and looking for alternative ways to support itself, the state may turn its existing ad hoc relations with the underworld into something much more focused and institutionalized, creating new dangers for its neighbours and the global order as a whole. The stakes could hardly be higher.

Geneva, SWIT: Global Initiative Against Transnational Organized Crime. 2023. 72p.

The Economics of Extortion: Theory and Evidence on the Sicilian Mafia

By Luigi Balletta and Andrea Lavezzi 

This paper studies extortion of firms operating in legal sectors by a profit-maximizing criminal organization. We develop a simple principal-agent model under asymmetric information to find the Mafia-optimal extortion as a function of firms' observable characteristics, namely size and sector. We test the predictions of the model on a unique dataset on extortion in Sicily, the Italian region where the most powerful criminal organization, the Mafia, operates. In line with our theoretical model, our empirical findings show that extortion is strongly concave in firm's size and highly regressive. The percentage of profits appropriated by Mafia ranges from 40% for small firms to 2% for large firms. We derive some implications of these findings on market structure and economic development.

Pisa, Italy: Dipartimento di Economia e Management – Università di Pisa, 2019. 47p.

By E.. Bähre.

From the eighties onward, when apartheid was crumbling, more and more Africans migrated to Cape Town, South Africa. They did not leave their homes in the Eastern Cape because they liked the city like the many tourists who, not unlike the Dutch East India Company of the colonial past, enjoy its revitalising qualities. To the Xhosa migrants Cape Town was, and still is, a hostile city. People fear murder, rape, and theft. They do not know their neighbours and friends are scarce. They have no family there, either living or dead, and racist attitudes are ever present. The Xhosa migrants have only one motivation for plunging themselves into the unknown and hostile squatter camps of Cape Town and that is money. This ethnography concerns the way in which Xhosa migrants in the townships of Cape Town collectively manage their money in financial self-help groups, also known as financial mutuals.1 The migrants organise a myriad of groups in which the participants collectively save, borrow, lend, or use their hard-earned money to form insurances. Some mutuals consisted of only a few neighbours who met each month at a member’s home, with each giving about R200 to the host member until all members had had a turn. Other mutuals were complex arrangements where members saved money together, mostly for Christmas, but also issued loans to each other. There were also many insurance arrangements involving up to a couple of hundred members that made sure that money was available to attend the funeral of a relative back home, or to prevent a burial in Cape Town itself. One could join a group voluntarily and the social constraint of fellow members would make sure that not all the money would be spent but would be used for the contribution to the financial mutual.

Leiden/Boston: Brill Academic Publisher, 2007. 205p.