Redistributive policy

Can the protests lead to meaningful changes in government policy, particularly around economic redistribution?

In May 2020, an African-American man named George Floyd was killed after a white police officer knelt on his neck for several minutes during a routine arrest. The brutality of the event and others like it sparked a series of protests against racism and police brutality, and calls for distributive justice as part of the Black Lives Matter (BLM) movement.

It is estimated that more than 15 million people participated in BLM protests in 2020 alone, and protests over the past decade have resulted in the 2010s being dubbed “the decade of protest”. Many of the stated goals of these protests highlighted demands for distributive justice – for example, reparations to descendants of African slaves in the BLM movement and the redistribution of economic capital during the 2011 Occupy Wall Street protests. protests lead to meaningful changes in government policy, particularly around the redistribution of economic resources? This is a difficult empirical question to answer in part because of the complexity of tax systems around the world and the lack of data on subnational public financing. In a new study, we circumvent these empirical difficulties and address this question using evidence from Nigeria, the most populous country in Africa and the sixth most populous country in the world according to United Nations estimates.

Nigeria’s highly centralized tax system makes it an informative area to study how governments could directly deploy tax resources in response to citizen protests. While most countries in the world operate some type of revenue sharing system where, for example, the federal government provides conditional or unconditional grants to subnational entities, Nigeria is one of more than 30 countries with revenue sharing systems. revenue sharing based on natural resource revenues. . This allows us to more carefully study the effects of protests on the distribution of income from a plausibly exogenous source (oil in this case), where federal or central governments do not depend on subnational entities or citizens for their income. . It also allows us to study these effects in the context of a heavily consolidated top-down revenue-sharing system where the central government may choose to respond to protests motivated by economic grievances by directly disbursing fiscal resources and suppressing protests. We construct a new dataset from 26 years of public finance records from 1988 to 2016 – bringing together revenue and expenditure data – and geocode protest information to test our hypotheses in Nigeria. The breadth of data over these years and the rich political history of Nigeria also allow us to test the hypotheses of the electoral politics literature about the different responses of central governments to protests under autocratic regimes versus democratic regimes.

We examine the responses of federal governments to citizen protests in the states of Nigeria, under revenue-sharing regimes where the federal government can directly control the disbursement of fiscal resources to the states in response to protests. We can also look at these responses under autocratic federal governments (Nigeria was mostly under military rule from about 1970 to 1999) and democratic federal governments (after 1999 in Nigeria) to examine whether autocratic and democratic governments respond differently to protests .

Our discoveries

We show that higher levels of state protest are associated with both increases and decreases in federal government revenue transfers to protesting states during the military and democratic periods. During the military period, protests increase a transfer result – called VAT transfers – by 5.2% to 11.5%, and increase a separate transfer result – called allowance transfers – by 6.8%. During the democratic period, protests reduce benefit transfers from 0.5% to 0.7%. We also explore political alignment, or whether the leader or president of the federal government and the leader or governor of the state government come from the same political party, as a channel that may explain the heterogeneity of the effects of protests on income transfers. Although there is no variation in alignment in the military period due to the fact that all military state governors are direct political appointees and therefore by our definition politically aligned with the president, we can examine the results by alignment in the democratic period with the introduction of electoral politics. . We find that protests increase VAT transfers in aligned areas between 4% and 6.6%, but decrease VAT transfers by around 1% in non-aligned areas. Findings on declining benefit transfers in protesting states are almost entirely due to protests in non-aligned states. We perform a number of falsification tests on our results and show that there is no significant association between other conflict events and transfers. We also show that there is no association between protests and non-transfer income such as internally generated income.

We find suggestive evidence that protests are increasing policing and police violence against protesters, especially in states that are not politically aligned with disbursing federal governments. In contrast, protests are associated with a decrease in police violence against protesters in aligned states. The results show that protests can influence tax redistribution. How they do this depends on political relations within governments and between disbursing federal governments and protesting regions. Governments can also respond to protests by increasing state violence against protesters.

To learn more, read the full report.