Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congowith Pablo Balan, Gabriel Tourek, and Jonathan Weigel, American Economic Review, 2022, 112(3).
Summary for a broader audience: AEA highlights, VoxDev, JPAL (video)
Income Concentration in British India, 1885-1946 with Facundo Alvaredo and Guilhem Cassan, Journal of Development Economics, 2017, 127.
The Association between Income and Life Expectancy in the United States, 2001-2014 with Raj Chetty, Micheal Stepner, Sarah Abraham, Shelby Lin, Ben Scuderi , Nick Turner and David Cutler, The Journal of the American Medical Association, 2016, 315(14).
The State Capacity Ceiling on Tax Rates: Evidence from Randomized Tax Abatements in the DRCwith Gabriel Tourek and Jonathan Weigel [Working Paper] [Pre-Analysis Plan] [AEA Registration]
Revise and resubmit, Econometrica
Summary for a broader audience: Econimate (video), JPAL (video), JPAL, World Bank
Abstract: This paper investigates how tax rates and tax enforcement jointly impact ﬁscal capacity in low-income countries. We study a policy experiment in the D.R. Congo that randomly assigned 38,028 property owners to the status quo tax rate or to a rate reduction. This variation in tax liabilities reveals that the status quo rate lies above the revenue-maximizing tax rate (RMTR). Reducing rates by about one-third would maximize government revenue by increasing tax compliance. We exploit two sources of variation in enforcement— randomized enforcement letters and random assignment of tax collectors — and find that the RMTR increases with enforcement. Including an enforcement message on tax letters or replacing tax collectors in the bottom quartile of enforcement capacity with average collectors would raise the RMTR by about 40%. Tax rates and enforcement are thus complementary levers. The government would raise 26% more revenue by jointly optimizing tax rates and enforcement than by optimizing them independently. These findings provide experimental evidence that low government enforcement capacity sets a binding ceiling on the revenue-maximizing tax rate in some developing countries, thereby demonstrating the value of increasing tax rates in tandem with enforcement to expand fiscal capacity.
Optimal Assignment of Bureaucrats: Evidence from Randomly Assigned Tax Collectors in the DRCwith Pedro Bessone, John Kabeya Kabeya, Gabriel Tourek, and Jonathan Weigel [Working Paper] [AEA Registration]
Revise and resubmit, American Economic Review
Summary for a broader audience: VoxDev
Abstract: The assignment of workers to tasks and teams is a key margin of ﬁrm productivity and a potential source of state effectiveness. This paper investigates whether a low-capacity state can increase its tax revenue by optimally assigning its tax collectors. We study the two-stage random assignment of property tax collectors into teams and to neighborhoods in a large Congolese city. The optimal assignment involves positive assortative matching on both dimensions: high (low) ability collectors should be paired together, and high (low) ability teams should be paired with high (low) payment propensity households. Positive assortative matching stems from complementarities in collector-to-collector and collector-to-household match types. We provide evidence that these complementarities reflect in part high-ability collectors exerting greater effort when matched with other high-ability collectors. According to our estimates, implementing the optimal assignment would increase tax compliance by 2.94 percentage points and revenue by 26% relative to the status quo (random) assignment. Alternative policies, such as replacing low-ability collectors with new ones of average ability or increasing collectors’ performance wages, are likely incapable of achieving a similar revenue increase.
Fiscal Contracts? A Six-Country Randomized Experiment on Transaction Costs, Public Services, and Taxation in Low- and Middle Income Countrieswith Ana de La O et al. [Common Pre Analysis Plan] [DRC Pre Analysis Plan] [DRC AEA Registration]
Abstract: We present results from six randomized controlled trials jointly designed to promote state-citizens transactions, in which citizens abide by a particular regulation or gain formal access to a public service in exchange for becoming “legible” to the state and liable for taxes. Each randomized intervention aimed to reduce the up-front costs of transacting with the state with in-person visits, during which citizens received information about the government benefits that come with one of three types of formalization (business registration, property titling, and access to a public service) and assistance in undertaking the bureaucratic process to formalize. A meta-analysis shows that the average effect of these interventions on citizens’ intent to formalize, on formalization, and tax payment is indistinguishable from zero. We also find substantial heterogeneity across sites in the interventions’ effect on individuals’ intent to formalize and actual formalization, which suggests that there are both demand- and supply-side barriers to formalization. The results shed light on central questions about the plausibility of establishing a fiscal contract in which governments trade tax payments for public benefits and services in low- and middle-income countries.
Zero-Sum Thinking, the Evolution of Effort-Suppressing Beliefs, and Economic Developmentwith Jean-Paul Carvalho, Joseph Henrich, Nathan Nunn, and Jonathan Weigel
Abstract: We study the evolution of belief systems that suppress productive effort. These include concerns about the envy of others, beliefs in the importance of luck for success, disdain for competitive effort, and traditional supernatural beliefs in witchcraft or the evil eye. We show that such demotivating beliefs evolve when interactions are zero-sum in nature, i.e., the gains for one individual tend to come at the expense of another. Within a population, our model predicts a divergence between material and subjective payoffs, with material welfare being hump-shaped and subjective well-being being strictly decreasing in demotivating beliefs. Across societies, our model predicts a positive relationship between zero-sum thinking and demotivating beliefs and a negative relationship between zero-sum thinking or demotivating beliefs and both material welfare and subjective well-being. We test the predictions of the model using data from two samples in the Democratic Republic of Congo and from the World Values Survey. In the cross-section, we ﬁnd a positive relationship between zero-sum thinking and the presence of demotivating beliefs, such as concerns about envy and beliefs in witchcraft (in the DRC) and skepticism about the importance of hard work for success (globally). Zero-sum thinking is also associated with lower income, less educational attainment, less ﬁnancial security, and lower life satisfaction. Comparing individuals in the same zero-sum environment, we observe the divergence between material outcomes and subjective well-being predicted by our model.
Missions, Social Ties, and Moral Universalism: Evidence from the Belgian Congo [Slides] [Old Draft - New version coming soon]
Abstract: I study the effect of historical exposure to Christian missions in the Belgian Congo on family and ethnic ties. I use archival records to identify the location of colonial Christian missions in the Democratic Republic of Congo and combine it with contemporary data collected from surveys, social network questionnaires, and a lab-in-the-field job referral experiment. Examining a sample of 975 respondents, I find that historical exposure to Christian missions results in less family and coethnic bias today. Missions are also associated with fewer family members and coethnics in respondents' social networks and fewer family members or coethnics recommended for a job in the job referral experiment. Finally, exposure to missions is associated with greater importance given to universal moral values relative to communal values. I use two approaches to address the potential bias introduced by the endogenous location of missions. First, I compare actual missions to missions that were ultimately abandoned. Abandoned missions were located in sites with similar geographic and historical characteristics but did not affect ethnic and family bias/ties or moral values. Second, I compare actual missions to counterfactual locations that would have been similarly suitable for missions. Exposure to counterfactual missions is not associated with ethnic and family bias/ties or moral universalism. I use data on mission characteristics to show that the effects operate through exposure to religious figures and teachers.
Work In Progress
Does Collecting Taxes Erode the Accountability of Informal Leaders? Evidence from the D.R. Congowith Gabriel Tourek, Elie Kabue Ngindu, and Jonathan Weigel [Pre Analysis Plan] [AEA Registration] [fieldwork completed]
Abstract: How does delegating state responsibilities to informal local leaders impact those leaders’ distribution of resources, integrity, and legitimacy? We tackle this question by exploiting whether city chiefs in the Democratic Republic of the Congo were randomly assigned to collect property taxes in 2018. To obtain objective measures of chief behavior, we study a government cash transfer program one year later in which chiefs had discretion over the recipients of development aid. We examine how delegating tax collection to chiefs impacts their (i) chosen distribution of aid benefits throughout the neighborhood, (ii) diversion of public resources, and (iii) perceived legitimacy among the residents they serve. Chiefs who collected taxes allocated more program benefits to poorer households and thus made fewer inclusion and exclusion errors. They were no more or less likely to pocket benefits or allocate them to family. Across a range of measures, citizens appear to have updated positively about chiefs who collected taxes. We provide evidence that collector chiefs were more likely to target the poor because door-to-door tax collection created opportunities to learn which households were in greatest need.
Delegating Tax Collection Does Not Adversely Affect Demand for Accountability: Evidence from an Experiment in the D.R. Congowith Mats Ahrenshop, Laura Paler, Gabriel Tourek, and Jonathan Weigel [Pre Analysis Plan] [AEA Registration] [fieldwork completed]
Abstract: While past scholarship finds that taxation catalyzes citizen participation, little is known about how the delegation of tax collection to local non-state actors — a common practice in developing countries — affects the fiscal contract between citizens and the state. Tax collection by local leaders rather than state agents could undermine the formation of a fiscal contract by shifting the locus of accountability. We examine a policy experiment in which 101 neighborhoods of Kananga, a large city in the D.R. Congo, were randomly assigned to property tax collection by state agents or local city chiefs. We combine this source of variation with a novel behavioral measure of collective action in which 2,700 citizens could request audit meetings related to a government-run antipoverty program in the neighborhood. We find no evidence that the type of agent in charge of tax collection differentially affected citizens’ propensity to hold the state or chief accountable. Our results indicate that delegating tax collection to local leaders in low-capacity states can increase revenue without adverse consequences for accountability.
Property Rights and Social Dependence: How Informal Institutions Shape Land Formalization in Weak Stateswith Pablo Balan, Gabriel Tourek, and Jonathan Weigel [Pre Analysis Plan] [AEA Registration] [fieldwork completed]
Abstract: What promotes property rights formalization in weak states? This paper studies a randomized land titling program in a large city in the D.R. Congo that cut formal land titles' price and transaction costs. The program caused a 44 percentage-point increase in the demand for land titles and a 13.7 percentage-point increase in their acquisition. We propose a theory of how informal social institutions shape citizens' incentives to formalize their land. We argue that citizens more engaged with local informal institutions have higher incentives to formalize since formalization can weaken ties of social dependence. We find that citizens with more powerful chiefs and who participate more in institutions such as churches and mutual aid societies are more likely to formalize. The program crowded out participation in social institutions and negatively impacted chiefs' perceptions. When exogenously offered formal property rights, citizens are more likely to exit the very same institutions that predict their demand. These findings challenge the notion that informal institutions provide an adequate substitute for formal land property rights.
The Political Economy of Ethnicity in the D.R. Congowith Sara Lowes, Nathan Nunn, James Robinson, and Jonathan Weigel [Pre Analysis Plan] [fieldwork completed]
Abstract: We study the extent to which politics can shape ethnic preferences by exploiting time variation in political competition between ethnic groups due to an episode of decentralization that increased the number of provinces in the Democratic Republic of the Congo (DRC) from 11 to 26. Decentralization changed the political importance of different ethnic groups in the region. Some ethnic groups that were previously politically unimportant became key players, while other ethnic groups that used to be political competitors gained majority control of their province. We use a series of lab-in-the-field experiments, IATs, and surveys to examine how ethnic preferences changed due to the decentralization process.
State Building via Punitive and Restorative Justice: Evidence from the D.R. Congowith James Robinson, and Jonathan Weigel [in the field]
Abstract: Resolving disputes is integral to the accumulation of state capacity. Yet policymakers often privilege fiscal capacity building in fragile states over legal capacity building. In this project, we study a low-capacity state—the D.R. Congo—seeking to establish legal authority and how its efforts to do so shape citizens’ demand for the state. Specifically, we examine the randomized rollout of a legal capacity-building program implemented at scale in the city of Kananga (DRC) by the Ministry of Justice and a local NGO. This program has (1) a “punitive” legal capacity-building arm in which state lawyers serve as neighborhood legal representatives with subsidized services and (2) a “restorative” legal capacity-building arm in which the neighborhood chief performs these same functions. We will examine effects on property rights security, crime, violence, and citizens’ willingness to pay for the formal state.
Progressivity, Fairness, and Tax Capacity: Evidence from the D.R. Congowith Joana Naritomi, Gabriel Tourek, and Jonathan Weigel [in the field]
Abstract: The innovation of progressive taxation in the early 20th century accompanied some of the largest increases in tax revenue in Europe and the US and is a core feature of most tax systems in today’s developed countries. In developing countries, however, states often use simplified tax instruments that are comparatively much more regressive. This project will explore the randomized introduction of progressive property taxation in the D.R. Congo, a low-income country with weak fiscal capacity. In collaboration with the Provincial Government of Kasaï-Central, our evaluation will compare neighborhoods in the city of Kananga assigned to either the existing flat fee schedule (control), a proportional tax rate schedule (treatment 1), or a schedule of progressive property tax rates (treatment 2). We will study effects on total revenue, household compliance, and perceptions of fairness and tax morale to inform the design at scale of a tax schedule that balances revenue and fairness.