Sacha Dray

Welcome! I am a PhD candidate in Economics at the London School of Economics (LSE).

I am on the 2021-2022 academic job market, and will be available for interviews at the ASSA and EEA meetings.

Fields: Public economics, Development, Economic History, Political economy.


Local Fiscal Capacity: Historical Evidence from U.S. Cities (Job Market Paper)

This paper explores the importance of tax revenue for future revenue collection capacity, spending, and growth of local governments. Using newly collected financial data of more than 300 U.S. cities over 1899-2000, I leverage source-specific variation in revenue through a shift-share research design. I report three main results. First, additional tax revenue causes greater spending on services than same-sized non-tax revenue, despite partial earmarking of non-tax revenue for this purpose. Second, tax revenue generates persistence in revenue. An initial increase in tax revenue has a 81% persistence on total revenue 10 years later, while similar non-tax revenue increase has dissipated after 3 years. This persistence can be explained by fiscal capacity improvements through higher effective tax rates, better enforcement and increased spending on revenue collection. Third, reliance on taxes has long-run effects on municipal finances and growth. Cities with initially higher tax revenue per capita in 1910-1936 have greater revenue and expenditure per capita throughout the next 60 years, as well as a higher median household income, larger population and migration.


Institutions, Trust and Responsiveness: Patterns of Government and Private Action During the COVID-19 Pandemic - With Tim Besley

LSE Public Policy Review, May 2021

Why have countries responded differently to the COVID-19 pandemic? We explore the role of institutions in shaping the response of governments and citizens to the progression of the disease, both conceptually and empirically. We document a puzzling fact: countries with “good institutions” – strong executive constraints, the holding of free and fair elections and more freedom – tend to have performed worse during the initial phase of the pandemic. They have been slower to implement a lockdown and experienced a larger death toll. On the other hand, countries with higher interpersonal trust and higher confidence in government appear to have fared better. We find limited evidence of differences in mobility reduction by citizens based on institutions in their country.

Working papers

Pandemic Responsiveness: Evidence from Social Distancing and Lockdown Policy during COVID-19 - With Tim Besley
March 2021
Media coverage: [

We study changes in social distancing and government policy in response to local outbreaks during the COVID-19 pandemic using U.S. county-level data from approximately 20 million smartphones. We show that social distancing has been responsive to local outbreaks, finding that a 1% increase in new cases (deaths) is associated with a 3% (11%) increase in social distancing. Responsiveness is higher in high-income, more educated, or Democrat-leaning counties, but is not explained by social capital or vulnerability. We also show that state-level policy responds to the evolution of the pandemic. States are 5% more likely to impose a lockdown or close non-essential shops after a 1% increase in cumulative deaths. We find evidence that policies restricting mobility further increase individual responsiveness to outbreaks, highlighting the complementary nature of public and private response to health risks.

The Political Economy of Lockdown: Does Free Media Make a Difference? - With Tim Besley
September 2020
Media coverage: [
LSE blog]

This paper explores the role of the media in how governments are reporting on and responding to the COVID-19 pandemic. In countries with free media, more deaths increase the probability of imposing a lockdown and are associated with greater reductions in mobility during lockdowns. This pattern is confirmed using predicted deaths from an epidemiological SIR model as an instrument for reported deaths. The findings can be explained by a simple model of policy-making where citizens with access to free media are better informed about the severity of the pandemic which in turn affects compliance and the decision to lock down.

Tax Compliance in a Crisis: Evidence from the Great Depression
In preparation for the book Tax Evasion and Tax Havens since the Nineteenth Century, edited by Palgrave Macmillan

This paper explores the factors associated with the non-payment of property taxes during the Great Depression. U.S. cities experienced skyrocketing levels of property tax non-compliance during 1929-1933, with an average loss of a quarter of their tax revenue in 1933. We present two main findings. First, we find that tax delinquency is negatively associated with economic conditions and taxpayer ability to pay, and is positively correlated with the presence of elections. Cities that experienced higher levels of delinquency tended to have fewer new construction of housing units, lower median income, and delinquency was higher during mayoral election years. We find no association between delinquency and burden of taxation or tax administrations measured by the salary of tax assessors and the presence of reduced rates for personal property. Second, despite the transitory nature of this episode, tax delinquency had a persistent impact on municipal revenue. Moving from the 25th to the 75th percentile of delinquency in 1929-1933 is associated with a 5% lower tax base valuation, tax revenue and municipal spending at the end of the Great Depression.

Emperors Without Sceptres: Early Colonial Leaders' Personality and Civil Conflicts - With Quoc-Anh Do, Elise Huillery and Jean-Louis Keene

We investigate the role of colonial leaders in shaping contemporary civil conflicts in former French colonies in Western Africa. We argue that the earliest leaders of the colonial era made key decisions in building local government that shaped local perceptions of, and interactions with, the state that led to variation in the local populations’ hostility towards the colonial government. Using the arguably arbitrary assignment of early colonial district leaders, we show that the personality of the first district leaders affected colonial hostility, and that such hostility has led to more modern civil conflicts.

Work in progress

How Much Do You Think About Taxes? Estimating Attention Using Salience of the Tax Schedule

This paper measures the role of attention in the behavioral response to taxation. I use variation in salience of the income tax schedule in the UK to identify the fraction of attentive taxpayers. Phase-out of tax deductions and tax credits create non-salient marginal tax rates compared to the income tax bands. Building on Saez (2010), I develop a framework to account for inattention when estimating the elasticity of taxable income and develop four testable predictions. Analysis of the Survey of Personal Incomes (SPI) gives an estimation that about 39% of taxpayers did not pay attention to the deduction of their tax-free personal allowance.

Wealth and Property Taxation in the United States - with Camille Landais and Stefanie Stantcheva

We study the history and geography of wealth accumulation in the US, using newly collected historical property tax records since the early 1800s. The property tax in the US was a comprehensive tax on all kinds of properties (real estate, personal property, financial wealth, etc), making it one of the first ``wealth taxes.’’ Our new data allows us to reconstruct wealth series at the city, county, and state levels over time and to study the effects of property taxes on property values, migration, and investment. We first document the long-term evolution of household wealth in the US since the early 1800s, offering the first fine-grained and high-frequency estimates of household wealth over more than 200 years. The US had significantly lower wealth than Europe and only caught up with Europe after WW1, despite GDP per capita having been larger than that of France or the UK since the late 1870s. Second, we study the spatial allocation of wealth in the US over the long run. We show that the geography of wealth is extremely persistent: per capita wealth by county in the 1850s is still highly predictive of income per capita today. Factors related to geography and demographics correlate strongly with wealth at the city, county, and state levels. Finally, we leverage our data and policy variations to better understand the determinants of wealth accumulation, in particular the role of property taxation. Our data features large variation in property tax rates across more than 300 municipalities and we can study the changes in wealth and other outcomes following episodes of large, sudden, and persistent increases or decreases in effective property tax rates, in a Generalized Synthetic Control Design (Xu [2017]). We find an implied elasticity of capital income with respect to the net-of-tax rate on income of about .70 after 10 years. This implied elasticity can be broken down into an (extensive) elasticity of the population of about .26 and an intensive elasticity of per capita income of about .44. The intensive margin elasticity appears to be driven in part by reporting and avoidance responses, but also by significant capitalization of property taxes in local real estate prices.

How to Improve Tax Systems in Developing Countries: Lessons from the Public Finance Literature

This paper reviews lessons from the public finance literature and consider how they can be applied in developing countries. I first summarize 5 standard policy prescriptions from the optimal taxation literature : 1) optimal taxation should balance both equity-efficiency concerns and evasion-enforcement concerns ; 2) only final goods should be taxed ; 3) final goods should be taxed uniformly ; 4) redistribution should include transfers toward low-income earners ; 5) taxes should depend on personal characteristics as well as income. I then summarize results from empirical studies and adapt these policy prescriptions to the context of developing countries. I highlight the following channels as effective to improve tax systems: tax instruments, tax administration, tax enforcement and tax morale. In addition, fiscal capacity appears to be closely linked to economic development. As countries develop, they progressively increase their capacity to collect taxes effectively. I develop a conceptual framework that incorporates the main dimensions of fiscal policy for developing countries.