governing the agency the less access citizens have to the agency itself. This unexpected result seems to indicate that service delivery requires a complex structure rather than a simple one.

A result we would like to highlight is the greater explanatory power of the institutional dummies with respect to the regional dummies. In particular, none of the regional dummy is statistically significant, while the dummy capturing agencies within the Judiciary is negative and significant correlation displayed. Thus, it appears that the judiciary is less accessible to users. This suggests that there is a significant different across public agencies, rather than regions, depending on the function the agency exercises. This result could also be explaining observing that the type of services provided by the Judiciary is quite different from other public agency and that the this branch of state power has normally less interaction with users.<sup>19</sup>

# **8. CONCLUDING REMARKS**

The quality of public sector institutions plays a critical role in the access and the costs of the public services provided by a government to its citizens. Poor governance can affect greatly public service delivery, both directly through higher price, and indirectly through lower quality or quantity available. When seeking a public service, some users may be discriminated against and pay more than the official price (because of corruption). Consequently, some users may get discouraged and choose not to seek the service needed due to the higher price imposed by the bribery “tax.” This paper explores both the price and the quantity components of the relationship between governance and services delivery using micro-level survey data: the bribery “tax” itself (which a priori may be regressive or progressive), as well as the “discouraged user effect” of such tax.

The evidence presented suggests that corruption acts as a regressive tax and that quality of governance is linked to access to public services. In particular, we constructed new measures of governance using data from users of public services from 13 government agencies in Peru. We find that for certain basic services low-income users pay a larger share of their income than wealthier ones do, that is, the bribery tax is regressive. Where there are few substitute private providers and thus a low price elasticity of the demand for public services for any income category, as in the case of basic services, low-income users appear to be discouraged more often and not to seek such a basic service than wealthier ones. Thus, bribery may penalize poorer users twice over, first by acting as a regressive tax, and then as a discriminating mechanism for access to basic services.

We then explored characteristics of households attempting to obtain a public service, and observed that higher education and age are associated with a higher probability of not seeking a public service. Trust in state institutions also influences the user’s behavior and decreases the probability of being discouraged. Further, knowledge of the mechanisms to report corruption and extent of social network increase the probability of being a discouraged user of public services, suggesting that the household may rely on substitutes through their networks. The household level demand-side analysis is complemented by a supply-side analysis based on the responses from the survey of public officials. The agency-level analysis suggests that corruption reduces the supply of services, while voice mechanisms and clarity of the public agency’s mission increase it.

> 19 Interestingly, municipal public agencies display a positive, though not significant, sign, suggesting that these agencies may be more capable to reach users.

18