Research

Publications

Corporate Taxation and Evasion Responses: Evidence from a Minimum Tax in Honduras  - American Economic Journal: Economic Policy 2024, 16(1): 482-517. DOI: 10.1257/pol.20210587 

(with Felipe Lobel and Pedro Zuniga) 

Abstract: We study corporate responses to a minimum income tax, using the universe of corporate tax filings in Honduras. The policy design allows us to separately estimate cost misreporting under profit taxation and the elasticity of reported revenue. Large corporations overreport true costs when taxed on profits. Taxing revenue leads to a substantial decrease in reported revenues: we estimate an elasticity in the range 0.35-1. The elasticity of revenue is attenuated when third-party information on the revenue of firms is available, suggesting misreporting plays an important role. Our results inform tradeoffs when broadening tax bases to curb evasion.

Selecting Top Bureaucrats: Admission Exams and Performance in Brazil  - The Review of Economics and Statistics 2023; doi: https://doi.org/10.1162/rest_a_01311 

Abstract: In the absence of strong incentive schemes, public service delivery crucially depends on bureaucrat selection. Despite being widely adopted by governments to screen candidates, it is unclear whether civil service examinations can predict job performance. This paper investigates this question by focusing on a highly prestigious and influential set of bureaucrats in Brazil: state judges. We first explore data on judges' monthly output and cross-court movement to separately identify what share of observed performance is explained by judges and courts. We estimate that judges account for at least 23% of the observed variation in the number of cases disposed. Using a novel data set on examinations, we then show that, within cohorts of candidates taking the same exam, those with higher grades perform better than their lower-ranked peers. Our results suggest that competitive examinations can be an effective way to screen candidates, even among highly qualified contenders.

The Importance of Political Selection for Bureaucratic Effectiveness. Economica. 2023; 90(359):  746 - 779. doi: 10.1111/ecca.12470 

Abstract: Economic theory of public bureaucracies as complex organizations predicts that bureaucratic productivity can be shaped by the selection of different types of agents, beyond their incentives. This theory applies to the institutions of local government in the developing world, where nationally appointed bureaucrats and locally elected politicians together manage the implementation of public policies and the delivery of services. Yet, there is no evidence on whether (which) selection traits of these bureaucrats and politicians matter for the productivity of local bureaucracies. This paper addresses the empirical gap by gathering rich data in an institutional context of district governments in Uganda, which is typical of the local state in poor countries. The paper measures traits such as the integrity, altruism, personality, and public service motivation of bureaucrats and politicians. It finds robust evidence that higher integrity among locally elected politicians is associated with substantively better delivery of public health services by district bureaucracies. Together with the theory, this evidence suggests that policy makers seeking to build local state capacity in poor countries should take political selection seriously.

Working Papers

Two Decades of Top Income Shares in Honduras [New!]

This paper presents distributional national accounts for Honduras over 2003–2019, using survey microdata, administrative tax records, and national account aggregates. It assembles comprehensive data on formal income for high-income individuals, including information on corporate shareholders, which allows corporate profits to be assigned to their owners. The estimates suggest a high and persistent inequality in the country: the top 1 percent highest earners received approximately 30 percent of the total income over the period, placing Honduras among the most unequal countries in the world. Undistributed corporate profits are the overwhelming income source at the very top of the distribution, highlighting its importance in the measurement of income inequality. Finally, using a panel of tax records, the paper also documents that not only is inequality persistent, but the same individuals are often observed at the top, suggesting that the observed inequality has deep roots.

Speed of Payment in Procurement Contracts: The Role of Political Connections [New!]

We provide evidence of a new channel through which politicians can exchange favors with campaign donors: earlier payment in procurement contracts. We exploit an electoral reform in Brazil that bans corporate contributions and partially breaks down the relationship between donors and politicians. Using a within-firm difference-in-differences identification strategy, we find that connected firms experience longer payment terms post-reform. The effect is larger in municipalities with low liquidity, where payment delays are more common, and for contracts awarded through a competitive tendering process. Our results point to the importance of designing rules that curb discretion over the contract execution process in government purchases.

MiDES: New Data and Facts from Local Procurement and Budget Execution in Brazil   [New!]

Corporate Responses to  Size-Based Tax Rates in Lithuania  

Building State Capacity: What is the Impact of Development Projects? 

Targeting in Tax Compliance Interventions: Experimental Evidence from Honduras 

Tax authorities often use low-cost communication with taxpayers to encourage voluntary compliance and avoid other costly interventions. This paper reports findings from an experiment with more than 30,000 taxpayers in Honduras, designed to assess how taxpayers with different risk scores respond to a communication intervention. Across several outcomes, the average effect of the intervention on compliance was zero. Contrary to the expectation of experts surveyed, only taxpayers considered to be at low risk of noncompliance increase their filing and reported income. Using rich administrative data and a causal forest algorithm, the paper finds that ex-ante predicted risk and responsiveness to the intervention are negatively correlated. These findings can inform the design of targeted interventions by tax authorities. 

Work in Progress

VAT Refunds and Firms’ Performance: Evidence from a Withholding Reform in Honduras

The Financial Risk of Winning a Procurement Contract: Evidence from Chile

Promotions, Performance, and Diversity in the Brazilian Judiciary 

Pre-Doctoral Research

"Sifting through the Data: Labor Markets in Haiti through a Turbulent Decade (2001-2012)" 

"But … what is the poverty rate today? Testing poverty nowcasting methods in Latin America and the Caribbean"

"Cyclical Variations in Participation and Employment in Urban Brazil"

"Investing in people to fight poverty in Haiti: reflections for evidence-based policy making (Haiti Poverty Assessment)"