Abstract
Studies of the incidence of benefits from public services have rightly stressed the difference between average and marginal benefits. Cross sectional methods of analysis for Lao PDR indicate that for public education and health services, total benefits are highest for the best-off quintile groups. Nevertheless, these groups’ shares of marginal benefits are generally considerably lower and the marginal benefit shares of poorer quintile groups are correspondingly higher. For primary and secondary education and for primary health centers, expanding the overall level of provision delivers a pattern of marginal benefits that is significantly more pro-poor than average shares indicate. Although panel estimates show a pattern of marginal benefits that is somewhat less pro-poor than cross-sectional results suggest, they do not change the finding that the pattern of marginal benefits is more pro-poor than the overall pattern of average benefits.
Highlights
The economy of the Lao People’s Democratic Republic (Lao PDR) is booming
Does an expansion in the level of public services necessarily benefit the poor, and how do these benefits compare with those accruing to better off groups? The present paper investigates this question empirically for the Lao PDR, using a large household income and
In the case of outpatient hospital services the results indicated a substantial movement of marginal benefits away from the richest quintiles and toward lower income quintile groups
Summary
The economy of the Lao People’s Democratic Republic (Lao PDR) is booming. Real gross domestic product (GDP) is growing at around 8%, based largely on natural resource exports. The diagram illustrates the hypothetical case of ‘early capture’ by better-off households, combined with ‘late capture’ by poorer households In this hypothetical example, at low levels of total service provision the benefits go primarily to the richer households. This paper attempts that exercise for the Lao PDR It analyzes data from a large household income and expenditure survey that records detailed information on the actual utilization of government-provided services, including health and education services, by individual households, along with the economic characteristics of those households. A central objective of the survey is to estimate poverty incidence for the country and its major regions, 1 but it collects data on utilization by households of some important categories of public services, notably schools and health facilities, making it possible to study the distributional impacts of spending in these categories. Its use to monitor findings on progress towards the Millennium Development Goals is described in Lao People’s Democratic Republic (2010)
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