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

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  • Lall, Somik V.
  • Lundberg, Mattias

Abstract

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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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3924.

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Date of creation: 01 May 2006
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Handle: RePEc:wbk:wbrwps:3924

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Keywords: Housing&Human Habitats; Public Sector Economics&Finance; Municipal Financial Management; Economic Theory&Research; Public Sector Management and Reform;

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  17. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-71, Nov./Dec..
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Cited by:
  1. Grigorescu, Adriana, 2010. "Serviciile publice între nevoia cetăţeanului şi posibilităţile administraţiei
    [Public services between the citizen need and administration potential]
    ," MPRA Paper 25132, University Library of Munich, Germany.
  2. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, vol. 20(1), pages 30-48, March.

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