Working Paper: CEPR ID: DP16771
Authors: Augustin Bergeron; Pedro Bessone; John Kabeya Kabeya; Gabriel Tourek; Jonathan Weigel
Abstract: The assignment of workers to tasks and teams is a key margin of firm productivity and a potential source of state effectiveness. This paper investigates whether a low-capacity state can increase its tax revenue through the optimal assignment of its tax collectors. We study the two-stage random assignment of property tax collectors (i) into teams and (ii) to neighborhoods in a large Congolese city. The optimal assignment involves positive assortative matching on both dimensions: high (low) ability collectors should be paired together, and high (low) ability teams should be paired with high (low) payment propensity households. Positive assortative matching stems from complementarities in collector-to-collector and collector-to-household match types. We provide evidence that these complementarities reflect in part high-ability collectors exerting greater effort when matched with other high-ability collectors. Implementing the optimal assignment would increase tax compliance by an estimated 37% relative to the status quo (random) assignment. By contrast, to achieve a similar increase under the status quo assignment, the government would have to replace 63% of low-ability collectors with high-ability ones or to increase collectors’ performance wages by 69%.
Keywords: bureaucracy; taxation; assortative matching
JEL Codes: D73; H11; M50; H20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| High-ability collectors paired with high-ability collectors (C78) | Greater effort (D29) |
| Greater effort (D29) | Higher compliance rates (H26) |
| Replacing 63% of low-ability collectors with high-ability ones (D29) | Similar increases in tax compliance (H26) |
| Increasing collector wages by 69% (J39) | Similar increases in tax compliance (H26) |
| Optimal assignment of tax collectors (H21) | Increase in tax compliance (H26) |
| Optimal assignment of tax collectors (H21) | Increase in tax revenue (H20) |