Inequality weakens local governance and public satisfaction, study finds

Local governments in developing countries are crucial for providing public services that promote human development and address challenges like extreme weather, unemployment and crumbling infrastructure. Yet, they often face difficulties in implementing cost-effective programs that meet citizens’ diverse needs, particularly in areas with significant socioeconomic inequalities.

A recent study, published in World Development and led by University of Notre Dame researcher Krister Andersson, explored the impact of economic and social inequalities on local government performance in Chile (a country with very high socioeconomic inequalities). Specifically, the paper assessed the effectiveness of external policies to alleviate the negative effects of inequality on the quality of local public services.

The study found that socioeconomic inequalities pose significant challenges for local governance, often trapping local governments in a cycle of limited resources, rising inequality and declining capacity to meet citizens’ needs.

“Interventions to help local governments to deal with inequality seem to be most effective when they recognize a leadership role and some autonomy of local leaders,” said Andersson, a professor of sustainable development at Notre Dame’s Keough School of Global Affairs.

Using a dataset spanning 56 local government territories in Chile from 2000 to 2014, the study analyzed citizen satisfaction with local government performance. Multilevel modeling was used to assess how different policy approaches—top-down, sector-based support and bottom-up, demand-driven funding—influence satisfaction levels.

The study evaluated four prominent national programs designed to address inequalities and citizen dissatisfaction. It found only one program to be effective, while the other three either had no impact or worsened the negative link between inequality and quality of local government services.

As socioeconomic disparities widened, the study found that citizen satisfaction with local government programs declined significantly. Poorer territories experienced greater dissatisfaction while wealthier citizens were less affected, as they relied less on government services for daily needs.

Extreme socioeconomic inequalities also constrained local governments’ ability to deliver effective services. Limited resources, inadequate personnel and insufficient infrastructure hindered their capacity to address diverse community needs. Despite significant investments by the Chilean national government to improve infrastructure and public services, many initiatives failed to bridge the gap.

The study, Andersson said, highlights the necessity of strategic, targeted interventions to break the cycle of inequality and enhance public satisfaction with local governance.

“These findings underscore the challenge faced by national governments trying to address inequalities. Simply increasing earmarked funding to local governments may not be sufficient. We see the importance of carefully designed policies and strengthened local governance structures to improve service delivery and address persistent socioeconomic inequalities,” he said.