Private response to exclusionary welfare policy: Evidence from Italian municipalities

Abstract

Exclusionary welfare policies are among the flagship proposals in the economic agenda of the far right. Yet, there is little empirical evidence as to whether – after gaining power – such parties do indeed cut welfare provisions for immigrants. Using data on more than 6 million procurement contracts within a close-election Regression Discontinuity Design, I estimate that Italian mayors supported by the far right significantly cut welfare spending for immigrants and refugees. However, using novel data on volunteering associations, I also show that the narrow victory of a far-right coalition is followed by a 9.6 % growth in the per-capita number of local NGOs. The effect is driven by social welfare associations, which provide poverty relief and assistance to vulnerable individuals. Individual-level survey data document how the growth in volunteering is driven by left-leaning citizens with positive attitudes toward immigrants. These findings show how – following political turnovers – the non-profit sector can substitute the state in the provision of public goods that are off the agenda of incumbent policymakers.