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The Cost of Decentralization: Linguistic Polarization and the Provision of Education


  • Cinnirella, Francesco
  • Schueler, Ruth


Decentralization is expected to improve the provision of public goods as it can better respond to people’s preferences. In this paper we argue that decentralization of education policy in a context of heterogeneous local preferences and with high coordination costs can lead to underprovision of education. To test this hypothesis we analyze the provision of public education in nineteenth-century Prussia which was characterized by a decentralized education system and a linguistically polarized society. Using unique county-level data on education expenditure we show that linguistic polarization had a negative impact on local spending. Instrumental variable estimates using distance to the eastern border suggest that the negative relationship can be interpreted as causal. Fixed-effect estimates exploiting a policy change in education spending show that centralization increased the provision of teachers in more linguistically polarized counties. Overall our results are consistent with the interpretation that decentralization can have heterogeneous effects.

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  • Cinnirella, Francesco & Schueler, Ruth, 2016. "The Cost of Decentralization: Linguistic Polarization and the Provision of Education," Annual Conference 2016 (Augsburg): Demographic Change 145832, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc16:145832

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    Cited by:

    1. repec:eee:exehis:v:67:y:2018:i:c:p:18-39 is not listed on IDEAS
    2. Hao, Yu & Xue, Melanie Meng, 2017. "Friends from afar: The Taiping Rebellion, cultural proximity and primary schooling in the Lower Yangzi, 1850–1949," Explorations in Economic History, Elsevier, vol. 63(C), pages 44-69.
    3. Cinnirella, Francesco & Schueler, Ruth M., 2016. "Nation Building: The Role of Central Spending in Education," CEPR Discussion Papers 11621, C.E.P.R. Discussion Papers.
    4. repec:kap:jecgro:v:22:y:2017:i:2:d:10.1007_s10887-017-9141-3 is not listed on IDEAS
    5. Francesco Cinnirella & Jochen Streb, 2017. "Religious Tolerance as Engine of Innovation," CESifo Working Paper Series 6797, CESifo Group Munich.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913

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