Francesco Amodio ’10 (Economics) co-authored this article for VoxDev with Barcelona GSE Research Professor Giacomo De Giorgi along with World Bank economists Jieun Choi and Aminur Rahman. In the article, the team gives an overview of a field experiment they conducted and theoretical model they developed that describes the interaction between firms and inspectors.
“In collaboration with the World Bank Group and the State Tax Service of the Kyrgyz Republic, we designed an incentive scheme for tax inspectors that rewards them based on the anonymous evaluation submitted by inspected firms. In theory, this should increase the bargaining power of firms in their relationship with tax officials, and decrease the bribe size. However, if firms pay bribes instead of taxes, bribes can increase on the extensive margin, and tax revenues could decrease.”
They found that anonymous rating of inspectors can decrease bribes and increase tax revenues as long as it takes into account market structure considerations.
Francesco Amodio is a graduate of the Barcelona GSE Master’s Program in Economics and the GPEFM PhD Program (UPF and Barcelona GSE). He is currently Assistant Professor of Economics at McGill University in Montreal, Canada. Follow him on Twitter or visit his website