Informal monitoring and enforcement mechanisms in public service delivery: Evidence from the public distribution system in India

Abstract

This paper shows that social networks provide informal monitoring and enforcement services that can curb leakages and improve the efficacy of public service delivery. We examine India's targeted public distribution system, under which poor households are entitled to subsidized grains and fuel. We show that Scheduled Castes (SCs) are more likely to buy grains when facing SC delivery agents, but there is no difference in the take up of fuel. We develop a theoretical framework positing that increased informal monitoring and enforcement drive our findings. We test our theory using observational survey data and unique data that we collected. Our empirical results provide strong support for the testable implications.