Inequality and its strain on local Governments: Do external interventions Help?

Socioeconomic inequalities complicate the local governance process, especially in low- and middle-income countries. With limited public resources and high socioeconomic inequalities, local governments can find themselves in a vicious circle of increasing inequalities, declining ability to address needs, and mounting social problems. Here, we investigate a possible way out of the vicious circle: policy interventions that help reduce the strain of inequality on local government responsiveness. We argue that interventions are effective in dampening the strain when these recognize the leadership role of local government officials. To test our arguments, we analyze longitudinal data on how citizen satisfaction with local governments varies in 56 Chilean territories over a 15-year period. We find that high socioeconomic inequality is associated with lower overall citizen satisfaction with local government performance, but exogenous interventions can dampen this association when local politicians take the lead in planning and implementing the interventions.