Income inequality and the quality of public services: A developing country perspective

That the high growth-rising inequality phenomenon – experienced by many high growth developing economies in the recent past – may lead to discontent among the poor is a well-discussed issue. This paper argues that as the demand for higher quality of the public services rises with income, the rising income in the hands of the rich leads to their dissatisfaction about the quality of available public services, thereby inducing them to form their own club for self-provision of the public services whenever possible. This, however, results in a lowering of quality available to the others outside the club despite less crowding at the publicly provided facilities.