How Does Bribery Affect Public Service Delivery? Micro-Evidence from Service Users and Public Officials in Peru

39 Pages Posted: 27 Jan 2006

See all articles by Daniel Kaufmann

Daniel Kaufmann

Natural Resource Governance Institute (NRGI); The Brookings Institution

Judit Montoriol-Garriga

La Caixa

Francesca Recanatini

World Bank - Global Governance Group; World Bank Institute

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Date Written: November 21, 2005

Abstract

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, users may be required to pay in bribes significantly more than the official price. Consequently, some users may be discouraged and choose not to seek a service needed due to the higher price imposed by the bribery "tax." In this paper we explore both the price and the quantity components of the relationship between governance and services delivery using micro-level survey data: the bribery "tax" itself (which a priori may be regressive or progressive), as well as the "discouraged user effect" of such tax. To do this, we construct new measures of governance using data from users of public services from 13 government agencies in Peru. In analyzing the costs borne by users to obtain public services, we find that for certain basic services low income users pay a larger share of their income than wealthier ones, i.e., the bribery tax is regressive. Where there are few substitute private providers and thus a low price elasticity of the demand for public services for any income category, as in the case of basic services, low income users appear to be discouraged more often than not to seek such a basic service than wealthier ones. Thus, bribery may penalize poorer users twice over, first by acting as a regressive tax, and then as a discriminating mechanism for access to basic services.

We then explore the household's characteristics when attempting to obtain a public service. The analysis suggests that higher education and age are associated with a higher probability of not seeking a public service. Trust in state institutions also influences the user's behavior and decreases the probability of being discouraged. Further, knowledge of the mechanisms to report corruption and extent of social network increase the probability to be a discouraged user of public services, suggesting that the household may rely on substitutes through the network. Finally, we complement the household level demand-side analysis with a supply-side analysis based on the responses from the survey of public officials, and construct agency-level measures for both 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 increases it.

Keywords: Governance, Institutions, Public Service Delivery, Corruption

JEL Classification: D10, D73, K42, O20

Suggested Citation

Kaufmann, Daniel and Montoriol-Garriga, Judit and Recanatini, Francesca, How Does Bribery Affect Public Service Delivery? Micro-Evidence from Service Users and Public Officials in Peru (November 21, 2005). Available at SSRN: https://ssrn.com/abstract=878358 or http://dx.doi.org/10.2139/ssrn.878358

Daniel Kaufmann

Natural Resource Governance Institute (NRGI) ( email )

80 Broad Street
New York, NY 10004
United States

HOME PAGE: http://www.resourcegovernance.org

The Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/kaufmannd

Judit Montoriol-Garriga

La Caixa ( email )

Av Diagonal 629
Barcelona, 08028
Spain

Francesca Recanatini (Contact Author)

World Bank - Global Governance Group ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-1557 (Phone)

World Bank Institute ( email )

1818 H Street
Washington, DC 20433
United States
202-473-1557 (Phone)

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