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What are public services worth, and to whom ? Non-parametric estimation of capitalization in Pune

Author:	Lall, Somik V.; Lundberg, Mattias;	Collection Title:	Policy, Research working paper ; no. WPS 3924
Country:	India;	Date Stored:	2006/05/19
Document Date:	2006/05/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	South Asia
Report Number:	WPS3924	SubTopics:	Economic Theory & Research; Housing & Human Habitats; Municipal Financial Management; Public Sector Management and Reform; Public Sector Economics
Volume No:	1 of 1

Summary: The availability and quality of basic public services are important determinants of urban quality of life. In many cities, rapid population growth and fiscal constraints are limiting the extent to which urban governments can keep up with increasing demand for these services. It therefore becomes important to prioritize provision of those services to best reflect local demand. The authors present a strategy to estimate the demand for public services, which is sensitive to heterogeneity in preferences across types of households, and the nonparametric estimation addresses problems arising from functional form restrictions. Using data from Pune, India, they estimate the demand for public services, as represented by the marginal change in the self-assessed monthly rental price of dwellings from the services. The authors find that the value of publicly provided services accruing to the poor is greater than that going to wealthier households, and even untargeted across-the-board investment in specific services can be progressive.


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