Who Benefits from Increased Access to Public Services at the Local Level? A Marginal Benefit Incidence Analysis for Education and Basic Infrastructure

Ajwad, Mohamed Ishan and Wodon, Quentin (2002): Who Benefits from Increased Access to Public Services at the Local Level? A Marginal Benefit Incidence Analysis for Education and Basic Infrastructure. Published in: World Bank Economists' Forum , Vol. 2, (July 2002): pp. 155-175.

Abstract

Do poor people benefit more or less than the nonpoor from an expansion in access to public services? And do those benefits depend on the existing level of access? Answering these questions is essential to strategies for empowering (or “investing in”) poor people, but the lack of panel data or repeated crosssectional data in poor countries has often made it impossible. This paper proposes a methodology for answering these questions using data from only a single cross-section survey. We argue that the methodology may be useful for monitoring the allocation of public expenditures in a context of decentralization, and we demonstrate this by applying it to local-level data from Bolivia and Paraguay. The results indicate that the marginal benefit incidence is higher (or at least not systematically lower) for the poor than for the nonpoor in education, but this is not the case for many basic infrastructure services. More generally, the poor seem to gain access only once the nonpoor already have high levels of access. This suggests that pro-poor policies must be implemented if the poor are to reap the benefits of gains in access faster.

• Item Type: MPRA Paper
• Language: English
• Keywords: Benefit incidence analysis; education; basic infrastructure
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H22 - Incidence; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; H - Public Economics > H5 - National Government Expenditures and Related Policies > H52 - Government Expenditures and Education

References

Ajwad, Mohamed Ihsan. 1999. “Are Public Schools in Texas Funded Fairly? An Analysis Using School Campus-Level Data.” Ph.D. dissertation, Department of Economics, University of Illinois at Urbana-Champaign.

Ajwad, Mohamed Ihsan, and Quentin Wodon. 2001. “Do Governments Maximize Access Rates to Public Services Across Areas?” World Bank, Latin America Poverty Group, Washington, D.C.

Behrman, Jere, and Steven G. Craig. 1987. “The Distribution of Public Services: An Exploration of Local Government Preferences.” American Economic Review 77(1):37–49.

Brueckner, Jan. 2000. “A Tiebout Tax Competition Model.” Journal of Public Economics 77(2):286–306.

Burki, Javed, Guillermo Perry, and William Dillinger. 1999. Beyond the Center: Decentralizing the State. Washington, D.C.: World Bank, Latin American and Caribbean Studies.

Chakravarty, Satya R. 1990. Ethical Social Index Numbers. Berlin: Springer-Verlag.

Ebert, Udo, and Patrick Moyes. 2000. “An Axiomatic Characterization of Yitzhaki’s Index of Individual Deprivation.” Economics Letters 68:263–70.

Giugale, Marcelo M., and Steven B. Webb, eds. 2000. Achievements and Challenges of Fiscal Decentralization: Lessons from Mexico. Washington, D.C.: World Bank.

Hoxby, Caroline. 1999. “The Productivity of Schools and Other Local Public Goods Producers.” Journal of Public Economics 74(1):1–30.

Hoxby, Caroline. 2000. “Does Competition among Public Schools Benefit Students and Taxpayers?” American Economic Review 90(5):1209–38.

Lanjouw, Peter, and Martin Ravallion. 1999. “Benefit Incidence, Public Spending Reforms, and the Timing of Program Capture.” World Bank Economic Review 13(2):257–74.

Ravallion, Martin, and Quentin Wodon. 2000. “Banking on the Poor? Branch Placement and Nonfarm Rural Development in Bangladesh.” Review of Development Economics 4(2):121–39.

Sen, Amartya. 1976. “Real National Income.” Review of Economics Studies 43(1):19–39.

Shoup, Carl. 1989. “Rules for Distributing a Free Government Service among Areas of a City.” National Tax Journal 42(2):103–22.

Siaens, Corinne, and Quentin Wodon. 2002. “Basic Infrastructure Services, Poverty, and Inequality: Comparing Subsidies for Access and Consumption.” World Bank, Latin American Poverty Group, Washington, D.C.

Tiebout, Charles M. 1956. “A Pure Theory of Local Expenditures.” Journal of Political Economy 64(5):416–42.

Wodon, Quentin, and Shlomo Yitzhaki. 2002a. “Evaluating the Impact of Government Programs on Social Welfare: The Role of Targeting and the Allocation Rules among Program Beneficiaries.” Public Finance Review, in press.

Wodon, Quentin, and Shlomo Yitzhaki. 2002b. “Inequality and Social Welfare.” In J. Klugman, ed., Poverty Reduction Strategies Source Book. Washington, D.C.: World Bank.

Wodon, Quentin, and Shlomo Yitzhaki. 2002c. “The Effect of Using Group Data on the Estimation of the Gini Income Elasticity.” Economics Letters, forthcoming.

World Bank. 2002. “Empowerment and Poverty Reduction: The World Bank’s Agenda.” World Bank, Washington, D.C.

Yitzhaki, Shlomo. 1982. “Relative Deprivation and Economic Welfare.” European Economic Review 17(1):99–113.

Yitzhaki, Shlomo. 1999. “A Public Finance Approach to Assessing Poverty Alleviation.” Department of Economics, Hebrew University of Jerusalem.