Félix Modrego, Universidad de O’Higgins-Instituto de Ciencias Sociales

“Partial Fiscal Descentralization of the Public-School Education in Chile: The Effects of Municipal Expenditures on the Educational Results”

Coautoreado con Juan Páez y Dusan Paredes (Departamento de Economía, Universidad Católica del Norte)

Abstract: Since the educational reform of 1981, Chilean municipal governments voluntarily invest resources in addition to the central government transfers in order to finance public-school education. This work estimates the impact of municipal expenditures on the educational results, taking into account the heterogeneity of students, of local socio-economic conditions and of the public-school system, which obscure the identification of causal effects. Using a strategy of instrumental variables based on municipal incomes from mining patents, a positive and significant effect of municipal expenditures was found on the average results of the standardised national mathematics test. A downward bias was verified in the estimations not controlled for endogeneity, a bias that is consistent with a compensatory rationale in municipal expenditures allocation. We fail to reject the absence of heterogenous effects according to municipal incomes, although point estimates suggest a potentially larger effect in poorer municipalities.