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Paper short abstract

This paper examines the impact of subnational governance quality on wellbeing in Africa. Using survey data from over 223,000 respondents across 40 countries and an IV strategy, it shows that better local governance reduces economic insecurity and improves living conditions.

Paper long abstract

Research has extensively demonstrated the importance of national governance quality for economic performance ad societal wellbeing. Yet, such aggregate analyses often overlook the impact of subnational governance, the level of government closest to the people. Consequently, we know little about the relationship between subnational governance quality (SGQ) and socioeconomic outcomes. This study examines how perceived SGQ - capturing local government performance, responsiveness, trustworthiness, and corruption - influences subjective wellbeing using individual-level survey data from more than 223,000 respondents across 40 African countries. OLS estimates show that a one-standard deviation increase in SGQ decreases economic insecurity - a index of shortages in food, water, fuel, medical care, and cash income - by about 3 percentage points (pp) and increases the probability of reporting "fairly good" or "very good" living conditions by about 7 pp. Because these estimates maybe biased due to potential endogeneity, I construct a leave-out-one mean instrument that averages the governance evaluations of all other community members to instrument for an individual's own assessment. Using this instrument, the results confirm the causal impact of SGQ on subjective wellbeing. Specifically, a one-standard deviation increase in SGQ reduces economic insecurity by over 5 pp and increases the likelihood of reporting "fairly good" or "very good" living conditions by about 14 pp. These effects attenuate in rural areas, strengthen with education and waged employment, but show no meaningful differences by gender.