Essays on Education Quality and Inequality in Federal Systems

Abstract

This three-paper dissertation studies education systems where decision-making power and funding is shared across different levels of government, their achievement levels and inequality across socieoconomic groups. The first chapter, “Population Density and Educational Inequality: The Role of Public School Choice and Accountability” relates National Assessment of Educational Progress (NAEP) test differences to levels of population agglomeration. Using detailed individual level-data, I establish that being in a denser area is associated with an increase in the socioeconomic gap of about 1 percent for each 10 percent increase in density levels. This is robust to the use of a geographic regression discontinuity design that leverages discontinuities in density across neighboring commuting zones. It is consistent with a theory whereby density leads to greater school socioeconomic segregation. The findings underscore that conventional democratic accountability mechanisms are insufficient to overcome this segregation. In the second chapter, “The Quality and Access Tradeoff in Decentralization Reform: Evidence from Education in the OECD and Spain” (co-authored with Susana Cordeiro Guerra) we study the effect of decentralization reform on education outcomes. While there are theoretical reasons for bringing the locus of decision-making closer to citizens, our knowledge of the effects of decentralization is limited. We first draw on a panel dataset from OECD countries to capture changes on where different decisions are made and their effects on outcomes. Decentralizing has a broadly negative effect on quality indicators but a positive effect on access indicators. We test the argument that upon decentralizing, some regional governments have incentives to assert their legitimacy and pursue highly visible and short-term policies, such as expanding access. Exploiting the exogenous timing of decentralization in Spain (in 1980-2000), we find that variation in the degree of regional assertiveness is related to the magnitude and sign of the effects of decentralization. The third paper, “The Relation between Local Financing and Education Outcomes: Evidence from US School Districts” explores the effects of locally raised revenue. I hypothesize that a higher local revenue share will be related to better school performance, as citizens will be more demanding and in control of the school budget. I look at test scores from the 2007 NAEP, with three empirical approaches. First, I exploit changes in house prices during the 2000 to 2007 boom. Second, I use variation from state fiscal regimes; and third, I leverage covariation within a geographic area. Consistently, local revenue share is associated with about .3-.7% SD higher scores per additional percentage point of local revenue share. It is also associated with greater inequality by socioeconomic status. I find evidence that locally financed districts differ by spending more on teacher salaries and less on administration and that Tiebout competition amplifies the effect of local financing. I find no evidence of a relation between local revenue and citizen participation in education governance. These findings suggest an important behavioral dimension of local financing that would support its continued use.