Decentralization and Education: an empirical investigation

Abstract

This thesis analyses, using a quasi-experimental approach, the relationship between decentralization and education in Colombia, where in 1991 decentralization of the State was implemented. The thesis focuses on two relationships: first, the relationship between decentralization and quality of education; and second, this relationship across individuals with different incomes. Theoretically, decentralization may increase the efficiency in the provision of education, and therefore, we would expect an increment in educational quality in schools affected by decentralization. Furthermore, decentralization may create a more unequal distribution of educational quality, and therefore, we expect that the impact of decentralization is asymmetric with respect to income. The thesis makes use of a new dataset that comes from two sources. First, data from the Ministry of Education provide an important array of school characteristics. Second, data from the ICFES, the institute in charge of administering standardized tests in Colombia, provide test scores and characteristics of individuals. We present three types of quasi-experimental models based on different control and treatment groups. First, we estimate the effect of decentralization on public schools, using private ones as a comparison group. Second, we restrict the estimation to public schools, but now the treatment group is comprised of schools in initially highly dependent departments, and the control group of schools in departments with initially highly independent relationship with the central government. Finally, the third model is a nested model of the first two. It is a more flexible model allowing nationwide effects and public school effects. The empirical results are mixed. We find a positive impact of decentralization in the first two models. However, the third model presents a negative result. The results from the tests on an asymmetrical impact of decentralization, depending on income, are mixed as well. In the last two models, the results are symmetric. However, in the first model the results are asymmetric, and interestingly, in favour of low-income individuals. That is, decentralization increases the test scores for individuals at the left tail of the income distribution.