Abstract
When seeking a public service, users may be required to pay in bribes more than the official price. Consequently, some users may be discouraged and choose not to seek a service due to the higher price imposed by the briberytax.This paper explores the price and quantity components of the relationship between governance and service delivery using micro-level survey data. The authors construct new measures of governance using data from users of public services from 13 government agencies in Peru. For some basic services, low-income users pay a larger share of their income than wealthier ones do; that is, the bribery tax is regressive. Where there are substitute private providers, low-income users appear to be discouraged more often and not to seek basic services. Thus, bribery may penalize poorer users twice - acting as a regressive tax and discouraging access to basic services. The paper explores the characteristics of households seeking public services. Higher education and age are associated with higher probability of being discouraged. Trust in state institutions decreases the probability of being discouraged, while knowledge of mechanisms to report corruption and extent of social network increase it, suggesting that households may rely on substitutes through networks. The study complements the household analysis with supply-side analysis based on data from public officials, and constructs agency-level measures for access to public services and institutional factors. Econometric results suggest that corruption reduces the supply of services, while voice mechanisms and clarity of the public agency's mission increase it.
Highlights
The quality of public sector institutions plays a critical role in access to and costs of the public services provided by a government to its citizens
Some users may get discouraged and choose not to seek the service needed due to the higher price imposed by the bribery “tax.” In this paper we explore both aspects of the relationship between governance and services delivery using micro-level survey data: the potential regressive impact of “bad governance” and the “discouraged user effect” of such bribery tax
The quality of public sector institutions plays a critical role in the access and the costs of the public services provided by a government to its citizens
Summary
The quality of public sector institutions plays a critical role in access to and costs of the public services provided by a government to its citizens. Poor governance can affect greatly public service delivery, both directly through higher price, and indirectly through lower quality or quantity available. When seeking a public service, some users may be discriminated against and pay more than what is officially set (because of corruption). Its main contribution is to provide preliminary evidence on the regressiveness of corruption and to link empirically access to public services and quality of governance. Empirical research has shown that bad governance and corruption reduce the quality of publicly provided services and investment in the public sector (Gupta, Davoodi, Alonso-Terme, 1998; Davis, 2004). Service delivery is weakened by bad governance, since the latter reduces the ability and incentives of policymakers and users to monitor providers (World Development Report, 2004)
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