Do local Governments maximize access rates to public services across areas?

This paper investigates whether the poor (or those who live in more densely populated areas) benefit more or less than the non-poor (or those who live in less densely populated areas) from an expansion in public services and whether this depends on the type of service provided. Using data from Bolivia, we analyze the allocation of education and basic infrastructure services across jurisdictions. Results indicate that the marginal benefit incidence is higher for the poor than for the non-poor in education, but lower in the case of access to infrastructure services. A model is proposed to suggest that the distribution of the observed marginal benefits from an expansion in the public provision of services is consistent with local Governments maximizing average access rates. This maximization appears to occur without policymakers placing varying distributional weights on the poor and rich in their implicit social welfare function.