Corrupting Learning: Evidence from Missing Federal Education Funds in Brazil

Abstract

We are grateful to Brian Knight and two anonymous referees for several insightful comments that significantly improved the paper. We are also thankful to the staff at the CGU for support and clarifications of the auditing process, and to Elaine Pazzelo and Roberta Biondi for help with the education data. We thank David Card, Miguel Foguel, Seema Jayanchandran, Enrico Moretti, Ted Miguel, Sergei Soares, Fernando Veloso and seminar participants at BREAD, GRADE, Ibmec-Rio, IPEA-Rio, Notre Dame, PUC-Rio, RAND, USP for comments and suggestions. T assia Cruz, Carolina Grottera, Susana Cordeiro Guerra, Marcio Nery, and Sinaia Urrusti-Frenk provided excellent research assistance. Financial support from CCPR and CNPq is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.© 2012 by Claudio Ferraz, Frederico Finan, and Diana B. Moreira. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. ABSTRACTThis paper examines if money matters in education by looking at whether missing resources due to corruption affect student outcomes. We use data from the auditing of Brazil's local governments to construct objective measures of corruption involving educational block grants transferred from the central government to municipalities. Using variation in the incidence of corruption across municipalities and controlling for student, school, and municipal characteristics, we find a significant negative association between corruption and the school performance of primary school students. Students residing in municipalities where corruption in education was detected score 0.35 standard deviations less on standardized tests, and have significantly higher dropout and failure rates. Using a rich dataset of school infrastructure and teacher and principal questionnaires, we also find that school inputs such as computer labs, teaching supplies, and teacher training are reduced in the presence of corruption. Overall, our findings suggest that in environments where basic schooling resources are lacking, money does matter for student achievement.

The impact of an unexpected wage cut on corruption: Evidence from a “Xeroxed” exam

“…6 Because corruption is notoriously difficult to measure, many researchers resort to some indirect assessments, such as evaluating corruption through changes in the outcome of interest when moving into a treatment where corruption is more likely. A similar strategy has been, for example, employed in Olken (2007) or Bertrand et al (2006 While this study adds to the developing pool of knowledge about corruption in the education sector (see, for example, Duflo et al, 2010;Svensson, 2004, 2005;Ferraz et al, 2011;Muralidharan and Sundaraman, 2011;Glewwe et al, 2010), it also complements the findings in a related literature that investigates incentives for teachers cheating. A leading example in this literature, Jacob and Levitt (2003) ingeniously show teacher cheating behavior in Chicago public schools and argue that this fraud is a byproduct of the high-powered incentive schemes implemented in that system.…”

Fighting Corruption in Education: What Works and Who Benefits?

“…This high-stakes nationwide standardized test is mandatory in order to obtain a tertiary education degree. Admissions to university or further training as well as access to 6 Exceptions include Ferraz, Finan, and Moreira (2012), who explore variation in corruption in education across Brazilian municipalities, showing how more corruption translates into lower scores for the students, thereby assessing the efficiency costs of corruption, and Choe et al (2013), who show survey evidence from Bangladesh that corruption in education is most taxing for the poor and less educated. Similarly, Hunt (2007) shows evidence from Peru that the victims of misfortune (crime) are also more likely to be victims of bribery.…”

Tax Me, but Spend Wisely? Sources of Public Finance and Government Accountability

“…First, municipalities control a significant share of public revenues (roughly one-fifth) and are responsible for key public expenditures. Their main spending responsibility, and the main expenditure outcome I consider, is education, an area in which Brazil's performance is generally considered disappointing compared to countries at similar levels of development (Ferraz, Finan and Moreira, 2012). Municipalities are in charge of primary education and shoulder much of the blame for this; there is both scope and need for more local investments in education.…”