Transitional Justice and Post-Conflict State Capacity

​with Monika Nalepa (University of Chicago)

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How can states rebuild fiscal capacity after a civil war? Trust in political institutions and trust in fellow citizens are cornerstones of tax compliance, necessary for a functioning fiscal contract. We posit that transitional justice (TJ) can influence both channels. We use a global game of tax compliance to represent the trade-off posed by TJ, which at the same time affects trust towards other citizens and in political institutions. Moreover, to make our model consistent with the literature on public goods provision in multi-ethnic contexts, we examine analytically how ethnicity moderates this tradeoff.  We test the model's predictions using the case of Bosnia and Herzegovina, which experienced a large civil war in 1992-95. Using trials of war criminals, through a staggered diff-in-diff design, we show that trials impact tax revenue and compliance in municipalities where the crimes were committed, but do so differently in the case of  co-ethnics and non-coethnics. ​