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Partial fiscal decentralization reforms and educational outcomes: A difference-in-differences analysis for Spain

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  • Salinas, Paula
  • Solé-Ollé, Albert

Abstract

Several arguments derived from fiscal federalism theory suggest that decentralization may improve the provision of public goods and services. However, theory remains inconclusive regarding these effects under partial decentralization. The aim of this study is to examine this hypothesis by evaluating the effects on educational outcomes of the partial fiscal decentralization reform that took place in Spain during the 1980s. Since education competences were devolved to the regions at different points in time, we can consistently estimate the effects of this reform by applying the differences-in-differences method and by using the non-decentralized regions as the comparison group. We find that the reform had a sizeable impact on the percentage of students dropping out early from school. The effects are much stronger for regions with a high level of revenues. We also find that the effects are concentrated in the high-school program and that the reform was not able to improve educational outcomes in the vocational program. We interpret these results as evidence that decentralization improved the match between education policy and population preferences.

Suggested Citation

  • Salinas, Paula & Solé-Ollé, Albert, 2018. "Partial fiscal decentralization reforms and educational outcomes: A difference-in-differences analysis for Spain," Journal of Urban Economics, Elsevier, vol. 107(C), pages 31-46.
    • Handle: RePEc:eee:juecon:v:107:y:2018:i:c:p:31-46
    DOI: 10.1016/j.jue.2018.08.003
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    Citations

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    Cited by:

    1. Jia, Junxue & Liu, Yongzheng & Martinez-Vazquez, Jorge & Zhang, Kewei, 2021. "Vertical fiscal imbalance and local fiscal indiscipline: Empirical evidence from China," European Journal of Political Economy, Elsevier, vol. 68(C).
    2. Yung‐ho Chiu & Kuei‐Ying Huang & Tai‐Yu Lin & Tzu‐Han Chang, 2022. "Government debt and fiscal execution efficiency," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(1), pages 111-128, January.
    3. Alexander Arévalo S & Víctor Giménez G & Diego Prior J, 2022. "Análisis de eficiencia en educación: una aplicación del método StoNED," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 92(2), pages 45-91, October.
    4. Julien Jacqmin & Mathieu Lefebvre, 2021. "Fiscal decentralization and the performance of higher education institutions: the case of Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(3), pages 743-758, August.
    5. Jia, Junxue & Ding, Siying & Liu, Yongzheng, 2020. "Decentralization, incentives, and local tax enforcement," Journal of Urban Economics, Elsevier, vol. 115(C).
    6. Daniel Aparicio-Pérez & Maria Teresa Balaguer-Coll & Emili Tortosa-Ausina, 2021. "Politics against Economics: The Case of Spanish Regional Financing," Working Papers 2021/15, Economics Department, Universitat Jaume I, Castellón (Spain).
    7. Manh‐Tien Bui & Thai‐Ha Le & Donghyun Park, 2023. "Impacts of fiscal decentralization on local development in Vietnam: A disaggregated analysis," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(1), pages 3-31, January.
    8. Yu Qi & Jinliang Yu, 2023. "Decentralization and local pollution activities: New quasi evidence from China," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(1), pages 115-159, January.
    9. Meng, Xia & Ding, Tao & Wang, Haisen, 2023. "Incentives for local government expenditures on people’s livelihood: the role of high-speed rail," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    10. Kang Mo Koo & Jerry Liang, 2021. "The Effect of Bilingual Education on Housing Price-a Case Study of Bilingual School Conversion," The Journal of Real Estate Finance and Economics, Springer, vol. 62(4), pages 629-664, May.
    11. Alonso, José M. & Andrews, Rhys, 2022. "Does vertical integration of health and social care organizations work? Evidence from Scotland," Social Science & Medicine, Elsevier, vol. 307(C).
    12. Pfister, Curdin & Koomen, Miriam & Harhoff, Dietmar & Backes-Gellner, Uschi, 2021. "Regional innovation effects of applied research institutions," Research Policy, Elsevier, vol. 50(4).
    13. Astrid Marie Jorde Sandsør & Torberg Falch & Bjarne Strøm, 2022. "Long‐run Effects of Local Government Mergers on Educational Attainment and Income," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(1), pages 185-213, February.

    More about this item

    Keywords

    Partial fiscal decentralization; Policy evaluation; Education; Differences-in-differences; Event-study;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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