My work covers public finance, political economy, and development. I study the taxation of firms and individuals as well as how people comply with public policies. Recently, I have worked on how cities can strengthen their capacity to collect property taxes, and the role of trust in compliance with quasi-voluntary policies.
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.
(with Tim Besley)
This paper explores the link between trust in government, policy-making, and compliance. It focuses on a specific channel whereby citizens who are convinced that a policy is worthwhile are more motivated to comply with it. This in turn reduces the government’s cost of implementing a policy and may also increase the set of feasible policies.Thus, state capacity is greater when citizens trust their government. The paper discusses alternative approaches to modelling the origins of trust, especially the link to the design of political institutions. We then provide empirical evidence consistent with the model’s findings that compliance is increasing in trust using the Integrated Values Survey and voluntary compliance during COVID-19 in the UK. We also show that countries with high levels of citizen trust in government were more likely to implement policies requiring voluntary compliance during the COVID-19 pandemic.The paper suggests that trust in government can play a role in building and expanding state capacities.
This paper measures the role of salience in the behavioral response of taxpayers. I focus on the 2011 reform of the UK income tax that introduced both salient changes in the tax schedule (a new marginal tax rate of 50% on income above £150,000) as well as nonsalient changes (the withdrawal of tax-free personal allowance for income above £100,000). I develop a conceptual framework to account for inattention as a form of optimization friction when estimating the elasticity of taxation income, provide testable predictions, and derive a measure of attention. Empirical evidence from administrative data confirm the importance of tax inattention. I also find significant learning over time, reducing inattention by 40% up to 10 years after the introduction of the reform. These results have implications for measuring the elasticity of taxable income, and suggest only short-run gains from using salience as a policy parameter.
We study changes in social distancing and government policy in response to local outbreaks during the COVID-19 pandemic. Using aggregated county-level data from approximately 20 million smartphones in the United States, we show that social distancing behaviors have responded to local outbreaks: a 1% increase in new cases (deaths) is associated with a 3% (11%) increase in social distancing intensity. Responsiveness is reinforced by the presence of public measures restricting movements, but remains significant in their absence. Responsiveness is higher in high-income, more educated, or Democrat-leaning counties, and in counties with low health insurance coverage. By contrast, social capital and vulnerability to infection are strongly associated with more social distancing but not with more responsiveness. Our results point to the importance of politics, trust and reciprocity for compliance with social distancing, while material constraints are more critical for being responsive to new risks such as the emergence of variants.
Policy Papers & Book Chapters
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.
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.
(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.