Beschreibung:
<jats:title>Abstract</jats:title><jats:p>In this paper, we provide an estimate of the impact of money laundering on residential house market prices. The housing market is commonly exploited by criminal organizations to clean illegal profits. The increase in demand due to money laundering contrasts the negative externality of crime on house prices, which has been investigated by a large literature. We build a new dataset on residential house prices at the provincial level in Italy over the period 2005–2012, obtaining a sample of 672 observations. We then estimate a hedonic equilibrium price model, controlling for proxies both for illegal profits derived from “entrepreneurial” crimes (drug dealing, receiving stolen goods, prostitution) and for violent crimes (extortions), together with traditional market drivers. Adding to the evidence from the traditional literature, which remarks the negative impact of crime on house prices, our findings suggest that money laundering from “entrepreneurial” crimes creates an upward distortion in the housing market prices. The impact is stronger where retail markets for illicit trades are richer.</jats:p>