Remittance dependence, support for taxation and quality of public services in Africa

We explore the heterogeneous effect of migrant remittances on citizens'
support for taxation using a sample comprising 45,000 individuals from
the Afrobarometer survey round 7 [2016-2018] across 34 African
countries. To correct for unobserved heterogeneity, we endogenously
identify latent classes/subtypes of individuals that share similar
patterns on how their support for taxation is affected by their
unobserved and observed characteristics, including remittances
dependency. We apply the finite multilevel mixture of regressions
approach, a supervised machine learning method to detect hidden classes
in the data without a priori assumptions on class/subtype membership or
how remittance dependency affects support for taxation across the
classes. Our data is best generated by an econometric model with two
classes/subtypes of individuals. In class 1 where more than two-thirds
of the citizens in our sample belong, we do not find any significant
evidence that remittance dependence affects support for taxation.
However, in class 2 where the remaining one-third of the citizens
belong, we find a significant negative effect of remittance dependence
on support for taxation. We further examine whether citizens' valuation
of the quality of public services is an important factor in determining
the classification of individuals into classes. We find that citizens
who have a positive appraisal of the quality of the public service
delivery have a lower probability of belonging to the class/subtype in
which depending on remittances reduces support for taxation.