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Working Papers

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.

Bureaucratic Deliberation and Accountability: Evidence from a Field Experiment in Benin [Draft available on request]

(w/ Leonard Wantchekon (Princeton) and Lazare Kovo (Emory))  

Abstract: Designing accountability systems for bureaucracies remains a key challenge for state capacity development. We carried out a randomized control trial with local bureaucrats in Benin to investigate whether performance improves with deliberation of external evaluation reports.  In the treated municipalities, bureaucrats organized internal meetings to deliberate on issues highlighted in audit reports and surveys of bureaucrats and citizens. We find a positive treatment effect on internal performance of bureaucrats (6.8 pp or 8.7% of the control group mean), while there is no immediate effect on service delivery. We investigated the mechanisms and found that the meetings heightened bureaucrats' awareness about corruption in the local government and lowered their trust in the municipal council.  Despite its positive effects on performance,  bureaucrats considered these to negatively affect both the working environment and workplace cohesion. These results suggest that if there is a buy-in from elected officials, deliberative institutions can improve bureaucratic performance and internal accountability at no cost to public service delivery. 

Spillovers in State Capacity Formation: Evidence from the Digitization of Land Records in Pakistan [Draft available on request]

(w/ Clement Minaudier (City University))

Abstract: Strong legal and fiscal capacity is crucial to foster economic development, yet we know little about how these two forms of state capacity interact. Using a newly digitized administrative dataset on taxation and surveys of local bureaucrats from Punjab, Pakistan, we show that legal capacity reforms can have unintended consequences for fiscal capacity. We exploit the staggered roll-out of digitization of land records in Punjab as a source of random variation in legal capacity. We find that digitization had a negative effect on tax collection. The fall in taxes was not due to a decrease in the tax base. Instead, digitization affected the bureaucracy's capacity to collect taxes. We show that bureaucrats in charge of both land records and tax collection before the reform but only of tax collection after it collected less tax as a percentage of their collection target and were less likely to meet their targets. The paper highlights the importance of understanding state capacity development from an organisational perspective.

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 analyse the relationship between performance, team diversity and size.  We first propose a model with knowledge spillovers in production, which predicts that the effect of having a person with a diverse knowledge set within a team increases with the size of the team. We experimentally test the model by randomly assigning students to solve knowledge questions in teams of different sizes, with or without a person with a diverse knowledge set. Our main finding is that the benefit of having a diverse rather than a same-skill colleague is greater in larger teams relative to small teams. We further show that such benefit is heterogeneous depending on the 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

Gender and Choice over Co-workers: Experimental Evidence from Pakistan (w/ Alexia Delfino (Bocconi University), Clement Minaudier (City University), Brais Álvarez Pereira (Universidade NOVA SBE) and Shamyla Chaudry (Lahore School of Economics))

Resting papers

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]

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