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The Effectiveness of Education and Health Spending among Brazilian Municipalities

Listed author(s):
  • Luiz de Mello


  • Mauro Pisu


This paper uses a large dataset combining census, household survey and budgetary data for nearly 4.000 Brazilian municipalities to estimate the impact of government spending on education and health outcomes. We deal with the multi-dimensional nature of the population’s social status by estimating structural equation models with latent variables using a limited-information two-stage least square (2SLS) estimator. Robustness of the baseline regressions to heterogeneity in the data is assessed on the basis of quantile regressions. The main empirical findings are that government spending is a powerful determinant of education outcomes, but this is not the case for health, and that spending on non-education programmes are also at least as important. In addition, there appears to be scope for gains in economies of scale in the provision of education and health care services, at least for selected segments of the conditional distribution of social outcomes. Finally, there are cross-sectoral effects in service delivery: health (education) outcomes affect the population’s education (health) status. This Working Paper relates to the 2009 OECD Economic Survey of Brazil ( L'efficacité des dépenses d'éducation et de santé des administrations municipales brésiliennes Ce document utilise une grande base de données combinant des informations issues des enquêtes réalisées auprès des ménages et des recensements, ainsi que les budgets de près de 4.000 municipalités brésiliennes pour estimer l’effet des dépenses des administrations publiques en matière d’éducation et de santé. Le caractère multidimensionnel des indicateurs sociaux est pris en compte par un modèle d’équation structurelle avec des variables latentes estimé par le double moindre carré à information limité. Des régressions quantiles ont été estimées pour évaluer la robustesse des résultats de base en tenant compte de l’hétérogénéité des données. Les principaux résultats sont que les dépenses des administrations publiques sont particulièrement déterminantes pour la performance de l’éducation mais pas de la santé et que les dépenses des programmes hors éducation sont aussi importantes. En outre, les résultats en matière de santé ont un impact sur les indicateurs d’éducation, et vice versa. Finalement, il apparaît que des économies d’échelle pourraient être exploitées pour la fourniture des services d’éducation et de santé au moins pour les collectivités situées sur certains segments de la distribution conditionnelle des résultats en matière d’éducation et santé. Ce Document de travail se rapporte à l’Étude économique de l’OCDE du Brésil, 2009 (ésil).

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 712.

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Date of creation: 10 Jul 2009
Handle: RePEc:oec:ecoaaa:712-en
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