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Applied Economics, Econometrics & Public Policy (CAGE) Seminar - Anne Brockmeyer (Institute for Fiscal Studies)

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Location: S2.79

Title: Tax Audits Under Weak Fiscal Capacity: Experimental Evidence from Senegal, joint work with Pierre Bachas, Alipio Ferreira, and Bassirou Sarr.

Abstract: Developing economies are characterized by limited compliance with government regulations, such as taxation. Resources for enforcement are scarce and audit cases are often selected in a discretionary manner. We study whether the increasing availability of digitized data helps improve audit targeting. In a field experiment at scale in Senegal, we compare tax audits selected by inspectors to audits selected by a risk-scoring algorithm. We find that inspector-selected audits are more likely to be conducted and uncover similar amounts of evasion as algorithm-selected audits. However, algorithm-selected audits require less manpower, are faster and may generate less corruption. In ongoing work, we attempt to unpack the algorithm’s (dis)functioning and its interaction with human capital.

Seminar organisers: Manuel Bagues & Ludovica Gazze

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