Working Papers

Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo

with Pablo Balan, Gabriel Tourek, and Jonathan Weigel [CEPR Working Paper] [Pre-Analysis Plan] [AEA Registration]

Forthcoming at the American Economic Review

Summary for a broader audience: AEA highlights, VoxDev, JPAL (video)

Abstract: This paper investigates the tradeoffs between local elites and state agents as tax collectors in low-capacity states. We study a randomized policy experiment assigning neighborhoods of a large Congolese city to property tax collection by city chiefs or state agents. Chief collection raised tax compliance by 3.2 percentage points, increasing revenue by 44%. Chiefs collected more bribes but did not undermine tax morale or trust in government. Results from a hybrid treatment arm in which state agents consulted with chiefs before collection suggest that chief collectors achieved higher compliance by using local information to more efficiently target households with high payment propensities, rather than by being more effective at persuading households to pay conditional on having visited them.


The State Capacity Ceiling on Tax Rates: Evidence from Randomized Tax Abatements in the DRC

with Gabriel Tourek and Jonathan Weigel [CEPR Working Paper] [Pre-Analysis Plan] [AEA Registration]

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. Replacing tax collectors in the bottom quartile of enforcement capacity by average collectors would raise the RMTR by 42%. 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, and thereby demonstrate 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 DRC

with Pedro Bessone, John Kabeya Kabeya, Gabriel Tourek, and Jonathan Weigel [CEPR Working Paper] [AEA Registration]

Summary for a broader audience: VoxDev

Abstract: The assignment of workers to tasks and teams is a key margin of firm productivity and a po-tential source of state effectiveness. This paper investigates whether a low-capacity state can increase its tax revenue through the optimal assignment of 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 di-mensions: 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. Implementing the op-timal assignment would increase tax compliance by an estimated 2.94 percentage points (37%) relative to the status quo (random) assignment. By contrast, to achieve a similar increase under the status quo assignment, the government would have to replace 63% of low-ability collectors with high-ability ones or to increase collectors’ performance wages by 69%.


Religion and the Scope of Morality: Evidence from Exposure to Missions in the D.R. Congo

Abstract: I study how historical exposure to Christianity, a religion that emphasizes universal morality, affects individuals' attitudes towards in-group members (i.e., family and coethnics) and out-group members (i.e., non-coethnics). 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 1,019 respondents, I find that historical exposure to Christian missions results in less in-group bias today. This effect is explained by more favorable attitudes towards out-group members, while attitudes towards in-group members are left unchanged. Additionally, missions are associated with more out-group members in individuals' social networks, a higher propensity to recommend out-group members for a job in the referral experiment, and more universalist self-reported values. To address the potential bias introduced by the endogenous location of missions, I use exposure to missions that were abandoned early on and for idiosyncratic reasons as a placebo test. Exposure to abandoned missions does not appear to have the same effect. Finally, I find evidence that part of the missions' enduring effect is explained by the adoption of a Christian identity that cuts across family and ethnic ties. However, this identity also engenders a negative bias towards non-Christians.


Fiscal Contracts? A Six-Country Randomized Experiment on Transaction Costs, Public Services, and Taxation in Developing Countries

with Ana de La O et al. [Pre Analysis Plan] [AEA Registration]

Abstract: We present results from six randomized controlled trials jointly designed to promote formalization and tax payments in low- and middle-income countries. Each randomized intervention used in-person visits, during which citizens received information about the government benefits that come with formalization and assistance in undertaking one of three types of formalization (business registration, property regularization, and access to public services). A meta-analysis shows that the average effect of these interventions on citizens’ intent to formalize, on formalization, and on tax payment is indistinguishable from zero. However, we find substantial heterogeneity across sites in individuals’ in-tent 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 informality and underscore the difficulty of regularizing taxation and service provision in low- and middle-income countries.


Property Rights and Social Dependence: How Informal Institutions Shape Land Formalization in Weak States

with Pablo Balan, Gabriel Tourek, and Jonathan Weigel [Pre Analysis Plan] [AEA Registration]

Summary for a broader audience: EGAP Stories of Change

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 the price and transaction costs of formal land titles. 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 who are more engaged with local informal institutions have higher incentives to formalize since formalization has the potential to 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 perceptions of chiefs. 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 effective substitute for formal land property rights.

Publications

Income Concentration in British India, 1885-1946 with Facundo Alvaredo and Guilhem Cassan, Journal of Development Economics, 2017, Volume 127 pages 459-469

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, 2016, The Journal of the American Medical Association, Vol 315, No. 14

Work In Progress

Tax Collection and Bureaucrat Performance: Experimental Evidence from the DRC

with 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’ subsequent local legitimacy and performance? 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. We measure chiefs’ performance based on how they chose to allocate scarce benefits of a government cash transfer program one year later. Chiefs who collected taxes targeted poorer households and made fewer inclusion and exclusion errors when distributing program benefits. They were no more or less likely to allocate tickets to family or pocket program benefits. Citizens also update positively about chiefs who collected taxes across a range of measures. We provide evidence that collector chiefs were more likely to target the poor because tax collection boosted their public-spiritedness and created opportunities for learning which households were in greatest need.

The Effects of Decentralized Tax Collection on Citizen Engagement

with Gabriel Tourek, Laura Paler, and Jonathan Weigel [Pre Analysis Plan] [AEA Registration] [fieldwork completed]

Abstract: This project examines how taxation by different levels of the government affects citizens' engagement. We exploit random variation in whether local bureaucrats known as avenue chiefs were responsible for property tax collection (treatment) or whether agents of the tax ministry collected taxes within avenue chiefs' jurisdictions instead (control). We propose to examine whether taxation by different levels of government induces greater citizen engagement directed towards the level of government that collected taxes. Moreover, we probe whether decentralized taxation is accountability enhancing in light of the fact that chiefs might also engage in more ethnic taxation, leading to more ethnic-based collective action and deepening ethnic divisions within communities. We measure citizen engagement using a novel behavioral exercise in which citizens have an opportunity to act collectively to demand a community monitoring meeting in the context of a real-world anti-poverty program. Overall, this inquiry aims to shed light on taxation's engagement and accountability implications at different levels of government in fragile states.


State Building via Punitive and Restorative Justice: Evidence from the D.R. Congo

with Mats Ahrenshop, Marina Ngoma, James Robinson, and Jonathan Weigel

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.