Strengthening Fragile States: Evidence from Mobile Salary Payments in Afghanistan

Abstract

Fragile states struggle to develop basic and essential capacities like tracking and paying employees. Developing these capabilities presumes confidence that the state will continue to exist, which is not assured in fragile states. We present the results of a randomized evaluation in Afghanistan, where the government implemented a major reform to modernize its teacher payroll system. This required teachers to biometrically register and receive digital salaries. This reform made employees legible to the state, reduced payment delays, and increased financial inclusion for teachers. We also find suggestive evidence that the reform increased student learning. Notably, implementation was most successful in districts with higher public confidence in the government’s ability to prevail against the Taliban. This result points to a complementarity between confidence in future stability and the development of basic state capacity.