Development Economics Seminar

Du 19/10/2022 de 16:30 à 18:00

Salle R2.21 Campus Jourdan

CALLEN Michael (LSE)

Modernizing the State During War: Experimental Evidence from Afghanistan

This paper provides evidence on how to effectively build basic state capacity during active internal conflict. We report results from a randomized evaluation of a major reform intended to improve the Afghan government’s ability to pay its employees, which involved over 30,000 employees of the Ministry of Education between 2018 and 2020. The first element of the program, designed to eliminate ‘ghost’ workers, required employees to register for a mobile money wallet with biometric identification. This helped eliminate ghosts from the payroll (1.3% of employees), and allows estimation of the true share of ghosts (8.4% - 20.4%). The second element transitioned employees from receiving their salary in cash to receiving it via direct mobile money transfers. This led to a 26 percentage point increase in support for the reform to be scaled nationally, reduced salary delays, and caused employees to dramatically increase activity on the mobile money network, demonstrating a potential pathway toward expanding Afghanistan’s formal financial system. Because the experiment spanned both secure cities and contested rural regions, we can examine whether state control complemented the reform. While the reform brought benefits everywhere, improvements materialized faster in cities. Our results highlight the importance of long-term horizons in state-building efforts and provide evidence that progress toward a modern bureaucracy is possible, even in the shadow of war and while the broader state is under threat.