June 2024

IZA DP No. 17053: The Importance of Being Local? Administrative Decentralization and Human Development

We examine the human development consequences of transferring responsibility for public service provision to local governments in India, using state-level variation in the timing of administrative decentralization reforms. We find that devolution of the responsibility for health functions from state to local governments, without concomitant authority over personnel or taxation, results in a worsening of neonatal, infant and under-5 child mortality. Such partial devolution results in worse indicators of public health provision, as well as lower rates of primary school completion. Our results cannot be attributed to differential pre-trends, omitted variables bias, or heterogeneous treatment effects.