Fiscal Capacity and Public Spending: Historical Evidence from U.S. Cities (Job Market Paper) [Draft coming soon!]
This paper shows that fiscal capacity affects levels and patterns of public spending. Using newly collected data on municipal finances for more than 300 U.S. cities over 1910-1936, I first provide evidence that sources of revenue affect local spending. Consistent with a political agency model with source-specific asymmetric information, I find that the marginal propensity to spend on public goods provision from tax revenue is larger than that from non-tax revenue or intergovernmental transfers. The identification strategy relies on a shift-share instrument that predicts municipal revenue by the average growth by revenue source weighted by a city's reliance on each source of revenue. Second, tax revenue increases are more durable and lead to a re-allocation of spending towards health and welfare services that persist beyond the period of revenue increase. Third, tax revenue changes are associated with long-term urban development manifested by higher individual income, greater migration and a larger workforce in the next decade.
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.
Pandemic Responsiveness: Evidence from Social Distancing and Lockdown Policy during COVID-19 - With Tim Besley
March 2021, Under review.
Media coverage: [ProMarket]
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
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.
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 inequality in the United States - with Camille Landais and Stefanie Stantcheva
Estimating the efficiency of wealth taxation: Evidence for the U.S. property tax - with Camille Landais and Stefanie Stantcheva