Working Paper: CEPR ID: DP5639
Authors: Iwan Barankay; Ben Lockwood
Abstract: Advocates of fiscal decentralization argue that amongst other benefits, it can increase the efficiency of delivery of government services. This paper is one of the first to evaluate this claim empirically by looking at the association between education expenditure decentralization and the productive efficiency of schools using a data-set of Swiss cantons. We first provide careful evidence that expenditure decentralization is a powerful proxy for legal local autonomy. Further panel regressions of Swiss cantons provide robust evidence that more decentralization is associated with higher educational attainment. We also show that these gains lead to no adverse effects across education types but that male students benefited more from educational decentralization closing, for the Swiss case, the gender education gap.
Keywords: Decentralization; Local Public Goods; Productive Efficiency
JEL Codes: H40; H52; H70; I20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| expenditure decentralization (dct) (H77) | educational attainment (I21) |
| expenditure decentralization (dct) + local governance competence (H77) | educational attainment (I21) |
| expenditure decentralization (dct) (H77) | gender gap in education (I24) |
| expenditure decentralization (dct) (H77) | professional school degrees (I23) |