IFS-UCL-LSE/STICERD Development Economics Work-In-Progress seminar - Michael Callen (LSE)

Title: Modernizing Fragile States

Abstract: Extreme poverty is concentrating in the parts of the world where it will be hardest to eradicate and where building state capacity is most challenging. Currently, one in three poor people live in "extremely fragile" states that are under constant threat of failure with governments that do not control their territory and have only rudimentary administrative structures. We report results from a randomized evaluation of a major reform intended to take essential first steps in building state capacity: identifying and paying employees. The Afghan government conducted an RCT evaluation of a reform affecting 30,000 employees of the Ministry of Education between 2018 and 2020. The first element of the program required employees to biometrically register and helped eliminate ghosts from the payroll (1.3% of employees) and permits 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 reduced the share of employees with delayed salaries from 55% to 31%, increased support for the reform to be scaled nationally by 11pp, and caused employees to increase mobile money savings and transfers. The reform increased learning outcomes by 0.2 standard deviations or the equivalent of 0.8 years of education in urban areas, where the benefits of the reform were most immediate.

Location: IFS Library.