Municipal Taxation and Urban Development

Last registered on May 21, 2025
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Pre-Trial

Trial Information

General Information

Title
Municipal Taxation and Urban Development
RCT ID
AEARCTR-0015522
Initial registration date
May 11, 2025

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
May 21, 2025, 12:23 PM EDT

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

Locations

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Primary Investigator

Name
Sandra Sequeira
Affiliation
LSE
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Other Primary Investigator(s)

PI Name
Gabriel Ulyssea
PI Affiliation
UCL
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Additional Trial Information

Status
In development
Start date
2025-05-12
End date
2029-09-01
Keywords
Firms & Productivity, Governance, Labor
Additional Keywords
Taxation, Urban development
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Urban population in Sub-Saharan Africa is predicted to more than double in the next 30 years. This fast urban growth poses formidable challenges to already struggling municipalities, often characterized by chaotic land use, informal housing and limited infrastructure. Institutional constraints play a key role in these poor outcomes, in particular the lack of {local) fiscal capacity, poorly defined property rights, as well as weak enforcement of land use and tax regulations. Understanding the determinants of municipal tax compliance and how it can shape urban development is rapidly becoming a pressing policy concern across the developing world.

This project looks at the case of Mozambique where urban population is projected to increase from 37 to nearly 60 percent by 2050.Our key goal is to understand how a reduction in tax compliance costs can i) shape the intensive and extensive margins of tax compliance; and (ii) how tax compliance shapes urban development. We partnered with the local government of the city of Maputo (the capital) to leverage the implementation of a large-scale reform that will move tax payments and records to an online platform. This project will be implemented at scale with an initial sample of 3,500 households and 3,000 firms.

The partnership with the municipality will enable the implementation of a randomized controlled trial that varies exposure to this reduction in tax compliance costs through an encouragement design to join the online platform. It will also provide access to administrative tax payment data from before and after the reform, for firms and households., which will allow us to investigate both short-,mid- and long-run impacts of the reform.
External Link(s)

Registration Citation

Citation
Sequeira, Sandra and Gabriel Ulyssea. 2025. "Municipal Taxation and Urban Development." AEA RCT Registry. May 21. https://doi.org/10.1257/rct.15522-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
The intervention consists of an encouragement design that provides information and support for tax payers in the treatment group to engage with the online platform for the payment of various taxes.
Intervention Start Date
2025-09-01
Intervention End Date
2026-09-01

Primary Outcomes

Primary Outcomes (end points)
Urban Development (Firms: location, access to municipal public services, firm investment, productivity, profits and employment levels, formalization, access to financial capital, beliefs and attitudes towards national and municipal government, access to procurement opportunities, attitudes towards taxation (fairness, tax morale, etc); knowledge about the costs of compliance with taxation; Households: location, investment in household infrastructure, assets, employment outcomes, income and consumption, civic norms, attitudes towards government, voting behavior, attitudes towards taxation (tax morale); knowledge about the costs of compliance with taxation)
Primary Outcomes (explanation)
Indexes capturing attitudes towards government will be captured through several sub questions that measure civic norms, trust in government, beliefs about the efficiency of municipal government spending among others.

Secondary Outcomes

Secondary Outcomes (end points)
Firm trading patterns (changes in the number, type and location of trading partners)
Household social interactions (changes in social networks, social capital and social cohesion)
Secondary Outcomes (explanation)
The payment of municipal taxation can indirectly affect whether firms engage in local, regional or international trade. Tax compliance can change incentives to become formal, which can come with better access to finance and to a wider set of trading partners in country and internationally. Changes in tax compliance and in the availability of public services can also affect generalized trust, cooperative behaviors and a higher likelihood that people will be involved in their communities (social capital).

Experimental Design

Experimental Design
The study consists of a single treatment arm (stratified by firms and households) in which treated participants will receive regular information over the phone in the form of text messages to encourage firms and households to use the new online platform to pay taxes. This information will explain how to access the platform and pay, the importance of paying municipal taxes for urban development and the share of tax payers who are already using the platform.
Experimental Design Details
Not available
Randomization Method
Randomization done in office by a computer.
Randomization Unit
Clusters (blocks, which are below neighborhoods-bairros)
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
37 Bairros, with a randomized saturation design in which 12 are treated at 20% and 14 at 80%
Sample size: planned number of observations
3500 households and 3000 firms
Sample size (or number of clusters) by treatment arms
1750 households and 1500 firms in the treatment group
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
LSE Ethics Review Committee
IRB Approval Date
2024-01-29
IRB Approval Number
N/A
Analysis Plan