Screen Now, Save Later? The Trade-Off between Administrative Ordeals and Fraud [latest version]
(w/ Daniel Gingerich (UVA) and Sandip Sukhtankar (UVA))
Abstract: Screening requirements are common features of fraud and corruption mitigation efforts around the world. Yet imposing these requirements involves trade-offs between higher administrative costs, delayed benefits, and exclusion of genuine beneficiaries on one hand and lower fraud on the other. We examine these trade-offs in one of the largest economic relief programs in US history: The Paycheck Protection Program (PPP). Employing a database that includes nearly 11.5 million PPP loans, we assess the impact of screening by exploiting temporal variation in the documentation standards applied to loan applications for loans of different values. We find that screening significantly reduced the incidence and magnitude of various measures of loan irregularities that are indicative of fraud. Moreover, our analysis reveals that a subset of borrowers with a checkered history strategically reduced their loan application amounts in order to avoid being subjected to screening. Borrowers without a checkered history engaged in this behavior at a much lower rate, implying that the documentation requirement reduced fraud without imposing an undue administrative burden on legitimate firms. All told, our estimates imply that screening led to a $744 million reduction in losses due to fraud.
Does Ability Matter for Discretionary Promotions in Bureaucracies? Evidence from Pakistan [latest version]
Abstract: While state capacity is central for economic development, existing studies have consistently shown that allocations in the developing state are through favoritism or patronage. I examine discretionary promotions of junior Pakistan Administrative Services (PAS) bureaucrats by their seniors and ask whether the juniors' ability matters for discretionary promotions. I compiled unique data on the abilities of junior officers, including both publicly available recruitment exam rank and information on job performance that is private to senior officials. Contrary to the existing literature, results show that ability matters for discretionary fast-track promotions. Results are heterogeneous across teams suggesting that incentives of seniors vary by the teams for which promotion decisions are made. These results suggest that discretion could end up in ability-based promotions when incentives are aligned
Informal fiscal systems in developing countries [latest version]
(w/ Clement Minaudier (City University) and Sandip Sukhtankar (UVA))
Abstract: Governments in developing countries have low fiscal capacity yet face pressures to provide public goods and services, leading them to rely on various unusual fiscal arrangements. We document one such - hitherto unexplored - arrangement: informal fiscal systems that rely on local bureaucrats to personally fund the delivery of public goods and services. Using survey data and government accounts from Pakistan, we show that public officials are expected to cover funding gaps in public services and they do so, at least partially, through extracted bribes. We propose a model of bureaucratic agency to explore when governments benefit from sustaining such systems and investigate welfare implications. Informal fiscal systems are more likely to arise when monitoring corruption is costly relative to monitoring the provision of public services, and politically-important groups of citizens do not bear the full cost of corruption. The existence of such systems can distort the effective incidence of the tax burden, reduce the incentives of government to fight corruption, and legitimize bribe-taking.
Team Size and Diversity [latest version]
(w/ Alexia Delfino (Bocconi University) and Brais Álvarez Pereira (Universidade NOVA SBE))
Abstract: We analyze the relationship of performance with team diversity and size. We first propose a model with knowledge spillovers in production, which predicts that the effect of team diversity on individual performance increases with team size. We experimentally test the model by randomly assigning students to solve knowledge questions in teams of different sizes, with or without diversity. Our main finding is that the benefit of diversity is increasing in team size. We further show that such benefit is heterogeneous depending on students' gender and the gender composition of teams. This has implications for how organizations can design their teams to maximize knowledge flows and performance.
Selected Work in Progress
Spillovers in State Capacity Formation (w/ Clement Minaudier (City University))
Bureaucratic Coordination and Public Service Delivery: Evidence from Benin (w/ Leonard Wantchekon (Princeton University) and Lazare Kovo (Emory University))
Gender and choice over co-workers: Experimental evidence (w/ Alexia Delfino (Bocconi University), Clement Minaudier (City University), Brais Álvarez Pereira (Universidade NOVA SBE) and Shamyla Chaudry (Lahore School of Economics))
Charitable donations and violence: Evidence from Pakistan
Abstract: This paper suggests a new channel of violence: the charitable donations channel. I exploit the rules of religious donations coupled with variations in the international price of gold/silver to arrive at a source of exogenous variation for donations. Using district-year level data on average household donations and terrorist attacks in Pakistan for the years 2001-2013, I ﬁnd that donations increase the probability of a terrorist attack by 79% and the number of terrorist attacks by 30. All the eﬀect of donations appears to work through an increase in suicide attacks as a speciﬁc terrorism tactic. All other tactics appear unaﬀected.
Based on the MRes paper: The Economic Causes of Terror: Evidence from Rainfall Variation and Terrorist Attacks in Pakistan [click here]