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Corrupting Learning: Evidence from Missing Federal Education Funds in Brazil

Author Info

  • 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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6634.

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Length: 44 pages
Date of creation: Jun 2012
Date of revision:
Publication status: published in: Journal of Public Economics, 2012, 96 (9-10), 712-726
Handle: RePEc:iza:izadps:dp6634
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Keywords: local governments; test scores; corruption; Brazil;

Other versions of this item:

Find related papers by 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

This paper has been announced in the following NEP Reports:

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  1. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, 01.
  2. Abhijit Banerjee & Shawn Cole & Esther Duflo & Leigh Linden, 2005. "Remedying Education: Evidence from Two Randomized Experiments in India," NBER Working Papers 11904, National Bureau of Economic Research, Inc.
  3. Fan, C. Simon & Lin, Chen & Treisman, Daniel, 2009. "Political decentralization and corruption: Evidence from around the world," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 14-34, February.
  4. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39 - 77.
  5. Oriana Bandiera & Andrea Prat & Tommaso Valletti, 2009. "Active and Passive Waste in Government Spending: Evidence from a Policy Experiment," American Economic Review, American Economic Association, vol. 99(4), pages 1278-1308, September.
  6. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
  7. Di Tella, Rafael & Schargrodsky, Ernesto, 2003. "The Role of Wages and Auditing during a Crackdown on Corruption in the City of Buenos Aires," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 269-92, April.
  8. Benjamin Olken, 2005. "Monitoring corruption: Evidence from a field experiment in indonesia," Natural Field Experiments 00317, The Field Experiments Website.
  9. Glaeser, Edward L. & Saks, Raven E., 2006. "Corruption in America," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1053-1072, August.
  10. Ferraz, Claudio & Finan, Frederico S., 2007. "Exposing Corrupt Politicians: The Effects of Brazil’s Publicly Released Audits on Electoral Outcomes," IZA Discussion Papers 2836, Institute for the Study of Labor (IZA).
  11. Jishnu Das & Stefan Dercon & James Habyarimana & Pramila Krishnan & Karthik Muralidharan & Venkatesh Sundararaman, 2011. "School Inputs, Household Substitution, and Test Scores," NBER Working Papers 16830, National Bureau of Economic Research, Inc.
  12. 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.
  13. Pritchett, Lant & Filmer, Deon, 1999. "What education production functions really show: a positive theory of education expenditures," Economics of Education Review, Elsevier, vol. 18(2), pages 223-239, April.
  14. Martina Björkman & Jakob Svensson, 2009. "Power to the People: Evidence from a Randomized Field Experiment on Community-Based Monitoring in Uganda," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 735-769, May.
  15. Katherine Baicker & Douglas Staiger, 2005. "Fiscal Shenanigans, Targeted Federal Health Care Funds, and Patient Mortality," The Quarterly Journal of Economics, MIT Press, vol. 120(1), pages 345-386, January.
  16. Edward L. Glaeser & Claudia Goldin, 2006. "Corruption and Reform: Introduction," NBER Chapters, in: Corruption and Reform: Lessons from America's Economic History, pages 2-22 National Bureau of Economic Research, Inc.
  17. Ritva Reinikka & Jakob Svensson, 2004. "Local Capture: Evidence From a Central Government Transfer Program in Uganda," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 678-704, May.
  18. Jakob Svensson, 2005. "Eight Questions about Corruption," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 19-42, Summer.
  19. Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
  20. Esther Duflo & Rema Hanna & Stephen P. Ryan, 2012. "Incentives Work: Getting Teachers to Come to School," American Economic Review, American Economic Association, vol. 102(4), pages 1241-78, June.
  21. Cristian Pop-Eleches & Miguel Urquiola, 2011. "Going to a Better School: Effects and Behavioral Responses," NBER Working Papers 16886, National Bureau of Economic Research, Inc.
  22. Menezes-Filho, Naercio & Pazello, Elaine, 2007. "Do teachers' wages matter for proficiency? Evidence from a funding reform in Brazil," Economics of Education Review, Elsevier, vol. 26(6), pages 660-672, December.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Corrupción y educación: tres historias
    by Francisco Mejía in Hacia el desarrollo efectivo on 2011-05-10 15:00:49
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:

  1. Juan Botero & Alejandro Ponce & Andrei Shleifer, . "Education, Complaints, and Accountability," Working Paper 69711, Harvard University OpenScholar.
  2. 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.
  3. 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.
  4. Xu, Guo, 2013. "Development through Empowerment: Delivering Effective Public Services – a Literature Review," ADB Economics Working Paper Series 382, Asian Development Bank.
  5. 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.

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