Decentralization and the quality of public services: Cross-country evidence from educational data

Abstract

In this paper, we study the impact of fiscal and political decentralization on the quality of public service delivery. While the effect of fiscal decentralization on public services is a recursive theme, to the best of our knowledge, our study is the first to investigate the impact of political decentralization. We use educational data as a proxy for the quality of public services. We use microdata from the PISA test scores from 22 countries and test for the impact of fiscal and political decentralization on students' performance. We use not only general measures of decentralization but, for the first time, also educationspecific decentralization measures. Our results indicate that the impact of fiscal decentralization on school outcomes is positive. However, the results regarding political decentralization are more ambiguous. We also observe that the scalar effect of both political and economic decentralization becomes more evident in large cities.

Education and fiscal decentralization. The case of municipal education in Chile

“…With different nuances and according to different databases, numerous studies on groups of countries have found evidence favoring the hypothesis that both political and FD improve some facets of educational performance (Busemeyer, 2008; Diaz-Serrano and Meix-Llop, 2012; Falch and Fischer, 2012; Letelier, 2010, 2012; Lindaman and Thurmaier, 2002). However, a study by Hanushek et al.…”

Entrepreneurial to Impactful Management: Income Inequality in Education

“…While this study highlights the limitations of decentralization with regard to income-based achievement gap, it also recognizes its various positive effects. Decentralized systems have been known to depress poverty and reduce various regional inequalities (Diaz-Serrano & Meix-Llop, 2012; Ezcurra & Pascual, 2008; Lessmann, 2009; Qian & Weingast, 1997). Less-developed regions often can offer more attractive investment conditions such as “more flexible labor markets, lower wages, or lower tax rates” that are more attractive than more developed regions and can facilitate “regional convergence” (Diaz-Serrano & Meix-Llop, 2012, p. 7).…”

“…Decentralized systems have been known to depress poverty and reduce various regional inequalities (Diaz-Serrano & Meix-Llop, 2012; Ezcurra & Pascual, 2008; Lessmann, 2009; Qian & Weingast, 1997). Less-developed regions often can offer more attractive investment conditions such as “more flexible labor markets, lower wages, or lower tax rates” that are more attractive than more developed regions and can facilitate “regional convergence” (Diaz-Serrano & Meix-Llop, 2012, p. 7). Specifically, managerial decentralization can be beneficial when school districts are dealing with larger student bodies.…”

“…The general logic behind decentralization is that it allows for the delivery of public services closer to the service recipients (Oates, 1999). Local governments have informational advantages, over higher jurisdictions, about local and regional socioeconomic conditions (Diaz-Serrano & Meix-Llop, 2012; Hayek, 1945). Therefore, with more ears on the ground, public school districts can be more responsive, specifically to the unique educational needs of disadvantaged students (Diaz-Serrano & Meix-Llop, 2012; Ezcurra & Pascual, 2008; Lessmann, 2009, Qian & Weingast, 1997).…”

“…Local governments have informational advantages, over higher jurisdictions, about local and regional socioeconomic conditions (Diaz-Serrano & Meix-Llop, 2012; Hayek, 1945). Therefore, with more ears on the ground, public school districts can be more responsive, specifically to the unique educational needs of disadvantaged students (Diaz-Serrano & Meix-Llop, 2012; Ezcurra & Pascual, 2008; Lessmann, 2009, Qian & Weingast, 1997). Some cases of decentralized school districts do show a reduction in achievement gap (Leithwood, 2010).…”