Participation, Legitimacy and Fiscal Capacity in Weak States: Evidence from Participatory Budgeting

Abstract

Building durable fiscal capacity requires that the state obtains compliance with its tax demands, a struggle for weak states that lack enforcement capacity. One potential option for governments in weak states is to enhance their legitimacy and thereby foster voluntary compliance. In this study, we report results from a phone-based participatory budgeting policy experiment in Sierra Leone that attempted to increase legitimacy and tax compliance by inviting public participation in local policy decision-making. In phone-based town halls, participants shared policy preferences with neighbors and local politicians and then voted for local public services that were subsequently implemented. We find that the intervention durably increased participants’ perceptions of government legitimacy. However, against influential models of tax compliance, we find a robust null effect on tax compliance behavior. In exploratory analyses, we document that partisan affiliation strongly conditions the interventions’ effects on tax compliance behavior and attitudes towards paying taxes.