The Impact of Devolution on Government Size and Provision of Social Services: Evidence from Pakistan

Abstract

This paper provides empirical evidence on the association between post-2001 devolution reform policy, government size, and specifc components of government expenditures based on a sample of panel data of provincial units in Pakistan from 1990 to 2015. The results demonstrate that devolution is associated with a larger government size, which provides empirical support for the common-pool hypothesis, implying that the decentralization that matters for the size of the general government depends on how sub-national governments finance their expenditures. Moreover, the fndings suggest a signifcant increase in the magnitude of Health and education facilities at the local level following the devolution reforms.