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American Economic Journal: Applied Economics: Vol. 5 No. 4 (October 2013)

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The Impact of Intergovernmental Transfers on Education Outcomes and Poverty Reduction

Article Citation

Litschig, Stephan, and Kevin M. Morrison. 2013. "The Impact of Intergovernmental Transfers on Education Outcomes and Poverty Reduction." American Economic Journal: Applied Economics, 5(4): 206-40.

DOI: 10.1257/app.5.4.206

Abstract

This paper provides regression discontinuity evidence on development impacts of intergovernmental transfers. Extra transfers in Brazil increased local government spending per capita by about 20 percent over a 4 year period with no evidence of crowding out own revenue or other revenue sources. Schooling per capita increased by about 7 percent and literacy rates by about 4 percentage points. In line with the effect on human capital, the poverty rate was reduced by about 4 percentage points. Somewhat noisier results also suggest that the reelection probability of local incumbent parties in the 1988 elections improved by about 10 percentage points.

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Authors

Litschig, Stephan (U Pompeu Fabra and Barcelona GSE)
Morrison, Kevin M. (U Pittsburgh)

JEL Classifications

H72: State and Local Budget and Expenditures
H75: State and Local Government: Health; Education; Welfare; Public Pensions
I21: Analysis of Education
I28: Education: Government Policy
I32: Measurement and Analysis of Poverty
I38: Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
O15: Economic Development: Human Resources; Human Development; Income Distribution; Migration

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