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Corrupting Learning: Evidence from Missing Federal Education Funds in Brazil

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  • Ferraz, Claudio

    () (Pontifical Catholic University of Rio de Janeiro (PUC-Rio))

  • Finan, Frederico S.

    () (University of California, Berkeley)

  • Moreira, Diana B.

    (Harvard University)

Abstract

This 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.

Suggested Citation

  • Ferraz, Claudio & Finan, Frederico S. & Moreira, Diana B., 2012. "Corrupting Learning: Evidence from Missing Federal Education Funds in Brazil," IZA Discussion Papers 6634, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp6634
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    Cited by:

    1. Borcan, Oana & Lindahl, Mikael & Mitrut, Andreea, 2014. "The impact of an unexpected wage cut on corruption: Evidence from a “Xeroxed” exam," Journal of Public Economics, Elsevier, vol. 120(C), pages 32-47.
    2. Julia A. Barde & Juliana Walkiewicz, 2014. "Access to Piped Water and Human Capital Formation - Evidence from Brazilian Primary Schools," Discussion Paper Series 28, Department of International Economic Policy, University of Freiburg, revised Jul 2014.
    3. Lucie Gadenne, 2017. "Tax Me, but Spend Wisely? Sources of Public Finance and Government Accountability," American Economic Journal: Applied Economics, American Economic Association, vol. 9(1), pages 274-314, January.
    4. Xu, Guo, 2013. "Development through Empowerment: Delivering Effective Public Services – a Literature Review," ADB Economics Working Paper Series 382, Asian Development Bank.
    5. Diogo Britto & Stefano Fiorin, 2016. "Corruption and Legislature Size: Evidence from Brazil," DISCE - Working Papers del Dipartimento di Economia e Finanza def054, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Niehaus, Paul & Sukhtankar, Sandip, 2013. "The marginal rate of corruption in public programs: Evidence from India," Journal of Public Economics, Elsevier, vol. 104(C), pages 52-64.
    7. Agüero, Jorge M. & Balcázar, Carlos Felipe & Maldonado, Stanislao & Ñopo, Hugo, 2017. "The value of redistribution: natural resources and the formation of human capital under weak institutions," Avances de Investigación 0028, Grupo de Análisis para el Desarrollo (GRADE).
    8. Branko Milanovic & Sean Higgins & Nora Lustig & Whitney Ruble & Timothy M. Smeeding, 2016. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62, pages 22-46, August.
    9. Giuseppe Attanasi & Claire Rimbaud & Marie Claire Villeval, 2018. "Embezzlement and Guilt Aversion," Working Papers 1807, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    10. Benjamin A. Olken & Rohini Pande, 2012. "Corruption in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 479-509, July.
    11. Krisztina Kis-Katos & Günther G. Schulze, 2013. "Corruption in Southeast Asia: a survey of recent research," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(1), pages 79-109, May.
    12. Oana Borcan & Mikael Lindahl & Andreea Mitrut, 2017. "Fighting Corruption in Education: What Works and Who Benefits?," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 180-209, February.
    13. Muralidharan, Karthik & Das, Jishnu & Holla, Alaka & Mohpal, Aakash, 2017. "The fiscal cost of weak governance: Evidence from teacher absence in India," Journal of Public Economics, Elsevier, vol. 145(C), pages 116-135.
    14. Juan Botero & Alejandro Ponce & Andrei Shleifer, 2013. "Education, Complaints, and Accountability," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 959-996.
    15. M. Shahe, Emran & Asadul, Islam & Forhad, Shilpi, 2018. "Distributional Effects of Corruption When Enforcement is Biased: Theory and Evidence from Bribery in Schools in Bangladesh," MPRA Paper 84637, University Library of Munich, Germany.
    16. Beekman, Gonne & Bulte, Erwin & Nillesen, Eleonora, 2014. "Corruption, investments and contributions to public goods: Experimental evidence from rural Liberia," Journal of Public Economics, Elsevier, vol. 115(C), pages 37-47.
    17. Konte Maty, 2017. "Working Paper 278 - Education resources and the quality of local governance in Africa," Working Paper Series 2395, African Development Bank.
    18. Guojun He & Shaoda Wang, 2016. "Do College Graduates Serving as Village Officials Help Rural China?," HKUST IEMS Working Paper Series 2016-39, HKUST Institute for Emerging Market Studies, revised Nov 2016.
    19. Bienvenido Ortega & Antonio Casquero & Jesús Sanjuán, 2016. "Corruption and Convergence in Human Development: Evidence from 69 Countries During 1990–2012," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 691-719, June.
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    21. Julia Alexa Barde, 2014. "What Determines Access to Piped Water in Rural Areas?Evidence from Small-scale Supply Systems in Rural Brazil," Discussion Paper Series 30, Department of International Economic Policy, University of Freiburg, revised Dec 2014.
    22. Beekman, Gonne & Nillesen, Eleonora & Voors, Maarten, 2018. "Sanctioning Regimes and Chief Quality: Evidence from Liberia," MERIT Working Papers 011, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    Keywords

    local governments; test scores; corruption; Brazil;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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