Decentralization and household economic well-being in Cameroon

The view has crystalized in development economics that centralized governments are often less responsive to local needs than decentralized ones. While this has led to extensive research on decentralization and social service delivery, its direct effect on household economic well-being (HEW) has received limited attention. To address this gap, we examine the impact of the 2010 decentralization reform on real total expenditures per adult equivalent—a proxy for HEW. To do this, we appeal to the pseudo-panel fixed effects and the unconditional quantile regression model with data from the two most recent Cameroonian household consumption surveys. Fixed effects estimates are reported at the mean and across expenditure quantiles, with standard errors corrected for within-prefecture and age-cohort correlations using the Jackknife estimator. Results show that the 2010 decentralization was significantly associated with improvements in HEW—in the order of 0.274 log points and 0.247 log points in the full and the labor force samples, respectively. Significant and positive responsiveness of HEW to decentralization is also recorded across expenditure percentiles, and the effect increases monotonically from the 10th to the 90th percentiles, except the dent among the median households. These findings are transmitted, at least in part, through improved social service delivery and associated labor market opportunities, with important policy implications for alleviating poverty and curbing rural–urban migration.