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Seminar Series: Asymmetry in Civic Information
October 20, 2021 — 12:30 pm to 1:45 pm
- In person: Sterling Hall – 475 N. Charter Street, Room 1328
- Virtual: Zoom link will be sent upon registration
Presenter: Paul Dower, assistant professor, Department of Agricultural & Applied Economics, UW–Madison
Asymmetry in Civic Information: An Experiment on Tax Participation among Small and Informal Firms in Togo
In low-income countries, tax collection practices can give rise to a substantial wedge between firms’ beliefs about what their tax obligations are and what they should actually pay, especially for small firms in the informal sector. Assistant Professor Paul Dower and colleagues ran a randomized controlled trial on informal and small scale firms in Lomé, Togo, to investigate whether alleviating this informational asymmetry improves tax participation. Surprisingly, the researchers found that treated firms, who they show are now better informed, participate less in the tax system. However, Dower and colleagues also found that this decline is steeper for treated firms with lower revenues at baseline. Given many of these firms are owner-operated, positive sorting by firm revenue is likely to be welfare-enhancing, the researchers provide suggestive evidence that this sorting also leads to an increase in total tax revenues.
Read the article: Asymmetry in Civic Information: An Experiment on Tax Participation among Small and Informal Firms in Togo
