Aid Crowd-Out: The Effect of NGOs on Government-Provided Public Services

62 Pages Posted: 6 Apr 2020 Last revised: 14 Apr 2020

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Date Written: April 2020


We document that in poor rural communities where government workers provide basic health services, the entry of an NGO that aims to provide similar services reduces the supply of government workers and total services. This is consistent with the NGO providing the combination of higher pay and stronger incentives for commercial activities. The decline in health services is most pronounced in villages where the NGO hires the government worker, where there is also an increase in infant mortality. In villages without any health worker beforehand, NGO entry unambiguously increases health services and reduces infant mortality.

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Suggested Citation

Deserranno, Erika and Nansamba, Aisha and Qian, Nancy, Aid Crowd-Out: The Effect of NGOs on Government-Provided Public Services (April 2020). NBER Working Paper No. w26928, Available at SSRN:

Erika Deserranno (Contact Author)

Northwestern University - Department of Managerial Economics and Decision Sciences (MEDS) ( email )

2001 Sheridan Road
Evanston, IL 60208
United States


Aisha Nansamba

BRAC International ( email )

Devine Town, Old Road
Monrovia, MO +231

Nancy Qian

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

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