State-Building and the Social Contract in Dual Polities: Evidence from Sierra Leone

Abstract

Taxation and state-building transform citizens’ relationships with political institutions, yet these processes often unfold in dual polities where weak state institutions coexist with traditional political institutions (TPIs) that anchor local governance. How does state expansion affect citizens’ social contracts with both the state and TPIs? We study this question in Makeni, Sierra Leone, where a recent tax reform greatly expanded the number of properties that received a tax bill and where TPIs are central to political life. For causal leverage, we exploit a sharp geographic discontinuity in tax demands created by a previously irrelevant administrative border. A year after the reform’s tax expansion, we surveyed 2,849 property owners on either side of this boundary and estimate treatment effects using a regression discontinuity design. Preliminary results show that taxation reduces both contributions to and political engagement with TPIs. At the same time, property owners who received a tax bill shift their dispute resolution preferences toward chiefs and, more suggestively, update negatively about the state across a range of attitudinal measures. These results suggest that state-building crowds out TPIs’ role in local service provision, but does so at the cost of government legitimacy, at least in the short term.