Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors

  title={Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors},
  author={A. Khan and A. I. Khwaja and B. Olken},
  journal={Randomized Social Experiments eJournal},
  • A. Khan, A. I. Khwaja, B. Olken
  • Published 2014
  • Economics, Business
  • Randomized Social Experiments eJournal
  • Performance pay for tax collectors has the potential to raise revenues, but might come at a cost if it increases the bargaining power of tax collectors vis-a-vis taxpayers. We report the first large-scale field experiment on these issues, where we experimentally allocated 482 property tax units in Punjab, Pakistan, into one of three performance pay schemes or a control. After two years, incentivized units had 9.4 log points higher revenue than controls, which translates to a 46% higher growth… CONTINUE READING
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