Government Decentralization Under Changing State Capacity: Experimental Evidence From Paraguay

Ernesto Dal Bó, Frederico Finan, Nicholas Y. Li and Laura Schechter

No 24879, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D02 D04 D23 D61 D73 D78 D82 H11 H43 J45 O22 Q28 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-exp, nep-ict and nep-lma
Note: DEV LS PE POL
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Citations: View citations in EconPapers (11)

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