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The Origins of Social Contracts: Attitudes toward Taxation in Urban Nigeria

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  • Cristina Bodea
  • Adrienne LeBas
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    Abstract

    How do social contracts come into being?� This paper argues that norm adoption plays an important and neglected role in this process.� Using novel data from urban Nigeria, we examine why individuals adopt norms favoring a citizen obligation to pay tax where state enforcement is weak.� We find that public goods delivery by the state produces the willingness to pay tax, but community characteristics also have a strong and independent effect on both social contract norms and actual tax payment.� Individuals are less likely to adopt pro-tax norms if they have access to community provision of security and other services.� In conflict-prone communities, where "self-help" provision of club goods is less effective, individuals are more likely to adopt social contract norms.� Finally, we show that social contract norms substantially boost tax payment.� This paper has broad implications for literatures on state formation, taxation, clientelism, and public goods provision.

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    Bibliographic Info

    Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2013-02.

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    Date of creation: 24 Jan 2013
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    Handle: RePEc:oxf:wpaper:wps/2013-02

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    1. Xavier Sala-i-Martín & Arvind Subramanian, 2003. "Addressing the natural resource curse: An illustration from Nigeria," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 685, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Leonard Wantchekon, 2003. "Clientelism and voting behavior: Evidence from a field experiment in benin," Natural Field Experiments, The Field Experiments Website 00339, The Field Experiments Website.
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    8. Fafchamps, Marcel, 1992. "Solidarity Networks in Preindustrial Societies: Rational Peasants with a Moral Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 41(1), pages 147-74, October.
    9. Arvind Subramanian & Xavier Sala-i-Martin, 2003. "Addressing the Natural Resource Curse," IMF Working Papers 03/139, International Monetary Fund.
    10. Benno Torgler & James Alm & Jorge Martinez-Vazquez, 2005. "Russian Attitudes Toward Paying Taxes – Before, During, and After the Transition," International Center for Public Policy Working Paper Series, at AYSPS, GSU, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University paper0518, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. Alberto Alesina & Reza Baqir & William Easterly, 1997. "Public Goods and Ethnic Divisions," NBER Working Papers 6009, National Bureau of Economic Research, Inc.
    12. Alm, James & McClelland, Gary H. & Schulze, William D., 1992. "Why do people pay taxes?," Journal of Public Economics, Elsevier, Elsevier, vol. 48(1), pages 21-38, June.
    13. Cox, Donald & Jimenez, Emmanuel, 1998. "Risk Sharing and Private Transfers: What about Urban Households?," Economic Development and Cultural Change, University of Chicago Press, vol. 46(3), pages 621-37, April.
    14. Bates, Robert H. & Lien, Da-Hsiang Donald., 1985. "A Note on Taxation, Development and Representative Government," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 567, California Institute of Technology, Division of the Humanities and Social Sciences.
    15. Habyarimana, James P. & Humphreys, Macartan & Posner, Daniel N. & Weinstein, Jeremy, 2006. "Why Does Ethnic Diversity Undermine Public Goods Provision? An Experimental Approach," IZA Discussion Papers 2272, Institute for the Study of Labor (IZA).
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