Informal Taxation in Rural Sierra Leone

Last registered on December 13, 2022

View Trial History

Pre-Trial

Trial Information

General Information

Title

Informal Taxation in Rural Sierra Leone

RCT ID

AEARCTR-0010593

Initial registration date

December 05, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

December 13, 2022, 10:51 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country

Sierra Leone

Region

Primary Investigator

Name

Andres Felipe Rodriguez Martinez

Affiliation

Stanford University

Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status

In development

Start date

2023-02-01

End date

2023-07-31

Keywords

Governance

Additional Keywords

Informal taxes, distortions, experiment, chiefs, traditional leaders

JEL code(s)

O17, H41, H71

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

In low-income contexts, particularly where state-capacity is low, informal taxation is a prevalent mechanism by which local leaders rely on social norms to raise contributions (money or labor) for public goods. In this paper, I compare two ways of measuring the incidence of informal taxation using data I collected in rural Sierra Leone. The first measure is based on past contributions to chiefs for multiple local public goods and the second is inferred from behavior in a labor supply field experiment. The latter has the advantage that captures distortions in behavior arising from informal taxation rather than past contributions that could have been partially voluntary. I then use these two measures to examine how the incidence of informal taxation is distributed among the rural population, particularly to shed light on the claim that informal taxation is regressive as previous work has emphasized.

External Link(s)

Registration Citation

Citation

Rodriguez Martinez, Andres Felipe. 2022. "Informal Taxation in Rural Sierra Leone." AEA RCT Registry. December 13. https://doi.org/10.1257/rct.10593-1.0

Sponsors & Partners

Experimental Details

Interventions

Intervention(s)

The intervention happens within an experimental environment where participants will be offered a one day job in rural Sierra Leone. At random, for some of them their earnings in this job will be visible to their traditional leader (chief) as part of a report of activities. Therefore, this will create a random increase in the possibility of informal taxation.

Intervention (Hidden)

Intervention Start Date

2023-02-01

Intervention End Date

2023-07-31

Primary Outcomes

Primary Outcomes (end points)

Labor supply decisions within the one-day offer (extensive and intensive margins)

Primary Outcomes (explanation)

These outcomes will be constructed the following way: for the extensive margin decision participants will do a Multiple Price List to state for which wages they will take up the job under each visibility condition. For the intensive margin, participants will both state how much time they want to work plus how many units of work (completed tasks) they end up doing at the randomly offer piece-rate.

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

The experimental design consists on recruiting a random sample of people in rural Sierra Leone for a one day job opportunity. I particularly want to sample heavily from the tails of the wealth/income distribution within each community. Then, once I have a sample of people in each community I will offer them a one day job. However, to 50% of them at random I will tell them their income in the job will be visible to their local chief as part of a reporting requirement. This will create the opportunity for informal taxation to take place. Then I will measure labor market outcomes in the one-day job (take-up and effort), which will allow me to infer an experimental informal tax rate.

Experimental Design Details

Randomization Method

The randomization will be done with each participant via a coin-flip.

Randomization Unit

Participants in the experiment.

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

2000

Sample size: planned number of observations

2000

Sample size (or number of clusters) by treatment arms

1000 in each arm

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Based on simulation that aim to capture an implied average rate of informal taxation of 6.6%, I have 95% power to detect a significant decrease in labor supply of about 8% on average and about 15% for the top half of the most "taxed" individuals. Splitting into more heterogeneity groups, I have an 80% to detect a difference in labor supply between the top tercile and the bottom tercile in the distribution of informal tax incidence, a 90% power to deter differences in labor supply between the top and bottom quartiles in the distribution of tax incidence, and a 70% power to detect differences in labor supply between the top quartile and the second quartile in the distribution of tax incidence.

Supporting Documents and Materials

IRB