Intergovernmental Transfers and Elementary Education: Quasi-Experimental Evidence from Brazil

Stephan Litschig ()
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Stephan Litschig: http://www.econ.upf.edu/en/people/onefaculty.php?id=p4131

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Whether providing additional resources to local communities leads to improved public services and better outcomes more generally, given existing management capacity and incentive and accountability structures, is an unresolved yet important question for public policy. This paper uses a regression-discontinuity design to evaluate the effect of unrestricted fiscal transfers on local spending (including on education), schooling and learning in Brazil. Results show that transfers increase local public spending almost one for one with no evidence of crowding out own revenue or other revenue sources. Extra per capita transfers of 1000 Reais lead to about 0.42 additional years of elementary schooling and student literacy rates increase by about 5.6 percentage points on average. Part of this effect arises through higher teacher-student ratios in municipal elementary school systems. Results also suggest that additional resources have stronger effects in more rural and less developed parts of Brazil.

Keywords: Intergovernmental grants; school finance; foreign aid effectiveness (search for similar items in EconPapers)
JEL-codes: H7 I2 O15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-edu, nep-lab and nep-ure
Date: 2008-08

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Persistent link: http://EconPapers.repec.org/RePEc:upf:upfgen:1142

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