depth, country-specific information on the quality of governance and of the public sector performance and draft action plans to improve governance.

Using responses from 1123 Peruvian public officials and 1696 Peruvian households, we focus on the costs of bad governance and the relative importance of various governance determinants on access to public services. We begin exploring the costs bore by users to obtain 13 different public services<sup>3</sup> . The evidence suggests that for certain basic services lowincome users pay a larger share of their income that wealthier ones. In addition, low-income users are more likely to be discouraged and not to seek a service than wealthier ones especially when in need of a basic service (as education, water and the police). Thus, bribery appears to penalize twice poorer users, both acting as a regressive tax and as a discriminating mechanism for access to basic services.

We then explore the household’s behavior when attempting to obtain a public service. The survey data allows us to carry out empirical exploration at two levels: at the household level and at the public agency level, as in Kaufmann et al. (2002). At the household level, we use the users’ evaluation of access to public services. Households report whether they decided not to seek a specific public service when needed, because of bad governance. This provides us with detail, experience-based information on access to public services. We combine this information with demographic data on household’s characteristics from the LSMS survey.

Our analysis suggests that individual characteristics, such as education and age, matter in the decision of whether or not to seek a service when needed: higher education attainments and middle-income users are associated with a higher probability not to seek a public service. Governance, measured as trust in state institutions, also influences the user’s behavior. Finally knowledge to report corruption and social network increases the probability to be discouraged.

We complement the household level analysis with a public official analysis. At the agency-level, the public officials’ data allows us to construct agency-level indices for both access to public services and institutional factors, namely the existence of audit mechanisms, the quality of rules governing each agency, the individual’s understanding of the agency mission, availability of resources and the extent of different forms of corruption, as reported by public officials. The simple OLS results suggest that corruption reduces access to services, while voice mechanisms and understanding of the agency’s mission increases it.

Overall, these findings reinforce the notion that poor governance affects greatly public service delivery, both directly through higher price, and indirectly through lower quality or quantity available. This country-specific evidence is however only the starting point, and more work is needed to test the robustness of these results in other countries.

The paper is organized as follows. Section 2 discusses the link between bad governance and access to public services. Section 3 and 4 introduce a detailed description of the survey data used and provides information on how each variable has been constructed. The discussion in Section 2 sets the stage for the discussion in Section 5 and 6. Section 5 introduces the estimation model and the results of the household level analysis are discussed in Section 6. Section 7 complements the household analysis by focusing on the supply side

> 3 The thirteen public services include: the local motor vehicle administration; the immigration office; the National Registry for Identification Cards; public registry; National Police; public schools; public hospitals; National Bank; local revenue services; local Water Companies; Social Security; National Tax Administration.

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