Government Decentralization Under Changing State Capacity: Experimental Evidence from Paraguay

66 Pages Posted: 6 Aug 2018

See all articles by Ernesto Dal Bo

Ernesto Dal Bo

University of California, Berkeley - Haas School of Business - Business and Public Policy

Frederico Finan

University of California, Berkeley - Department of Economics; IZA Institute of Labor Economics

Nicholas Li

University of California, Berkeley

Laura Schechter

University of Wisconsin at Madison - Agricultural and Applied Economics; University of Wisconsin at Madison - Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2018

Abstract

Standard models of hierarchy assume that agents and middle managers are better informed than principals about how to implement a particular task. We estimate the value of the informational advantage held by supervisors – middle managers – when ministerial leadership – the principal – introduced a new monitoring technology aimed at improving the performance of agricultural extension agents (AEAs) in rural Paraguay. Our approach employs a novel experimental design that elicited treatment-priority rankings from supervisors before randomization of treatment. We find that supervisors did have valuable information—they prioritized AEAs who would be more responsive to the monitoring treatment. We develop a model of monitoring under different allocation rules and roll-out scales (i.e., the share of AEAs to receive treatment). We semi-parametrically estimate marginal treatment effects (MTEs) to demonstrate that the value of information and the benefits to decentralizing treatment decisions depend crucially on the sophistication of the principal and on the scale of roll-out.

Suggested Citation

Dal Bo, Ernesto and Finan, Frederico and Li, Nicholas and Schechter, Laura, Government Decentralization Under Changing State Capacity: Experimental Evidence from Paraguay (August 2018). NBER Working Paper No. w24879, Available at SSRN: https://ssrn.com/abstract=3226809

Ernesto Dal Bo (Contact Author)

University of California, Berkeley - Haas School of Business - Business and Public Policy ( email )

Berkeley, CA 94720
United States

Frederico Finan

University of California, Berkeley - Department of Economics ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Nicholas Li

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Laura Schechter

University of Wisconsin at Madison - Agricultural and Applied Economics ( email )

427 Lorch St.
Madison, WI 53706-1503
United States

HOME PAGE: http://aae.wisc.edu/lschechter

University of Wisconsin at Madison - Economics ( email )

William H. Sewell Social Science Building
1180 Observatory Drive
Madison, WI 53706-1393
United States

HOME PAGE: http://aae.wisc.edu/lschechter

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