The Role of Intergovernmental Fiscal Transfers in Improving Education Outcomes

Page 61

Assessing the Effects of Intergovernmental Fiscal Transfers on Education Financing and Outcomes | 25

maybe less than the original amount of the conditional transfer. This suggests that it is important to explore whether these displacement effects reduce the effect of intergovernmental transfers on levels of subnational spending on education. On the whole, intergovernmental fiscal transfers in the case study countries are successful in increasing subnational spending on education. Most of the case studies used the same approach to explore the causal effects of transfers on subnational education spending (World Bank 2021). Their analyses showed that the receipt of general transfers resulted in subnational governments spending more on education, although specific-purpose transfers often had a larger effect. Table 3.3 summarizes the marginal effects of fiscal transfers on subnational education spending in the case study countries. It shows that a US$1.00 increase in general transfers leads to an increase of up to US$0.38 in subnational education spending. Other studies in the case study countries and elsewhere have produced similar findings on the effect of general transfers on subnational education spending (Arvate, Mattos, and Rocha 2015; Boadway and Shah 2007). The effects of general transfers and specific-purpose transfers on subnational education spending can differ (Das et al. 2013; Ding, Lu; and Ye 2020).4 Wherever it was possible for the case studies to distinguish between different types of transfers, the findings showed that unconditional transfers always tended to increase subnational education spending. For example, in Bulgaria and Indonesia, the marginal effect for unconditional transfers was 0.66 and 0.11, respectively. In China, a recent study also found that general transfers raised counties’ education spending more than increases in a county’s own revenues (Ding, Lu, and Ye 2020). The effects of conditional transfers on subnational education spending in the case study countries were more mixed. In Brazil and China, the estimated marginal effects for education-specific conditional transfers were higher than those for unconditional transfers. In Indonesia, a specific-purpose transfer aimed at reducing inefficiencies had no statistically significant impact on total subnational education spending, even though a US$1.00 increase in general transfers raised total education spending by US$0.11. The overall impact of different transfers is likely to be dependent, to an extent, on their relative size. It is possible that smaller conditional transfers are likely to have less impact. In Brazil, conditional transfers make up approximately 62 percent of municipality education spending compared to less than 14 percent for districts in Indonesia, which may account for the difference in their estimated effect on subnational spending in the two countries. In contrast, own revenues and general transfers are negligible in Uganda, which implies that levels of subnational education spending are largely determined by specific-purpose transfers. TABLE 3.3  Marginal effects of fiscal transfers on subnational education spending INDONESIA

BRAZIL

BULGARIA

CHINA (PROVINCE)

CHINA (COUNTY)

Total transfers

0.11**

n.a.

0.66***

0.25**

n.a.

General purpose

0.18***

0.38***

n.a.

n.a.

0.1***

Specific purpose

−0.08

0.62***

n.a.

n.a.

1.6***

per capita

per capita

per student

per capita

per capita

Dependent variable

Source: Case studies in chapters 6, 8, 9, and 10. Note: n.a. = not applicable. Significance levels: * = 10 percent, ** = 5 percent, and *** = 1 percent.


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Notes

2min
page 333

References

9min
pages 334-339

Key policy directions

2min
page 332

Fiscal transfer mechanisms

2min
page 312

education?

2min
page 311

10.2 Education expenditure in Shandong, 2018

7min
pages 307-309

9.1 Evolution of the allocation mechanism in school finance

2min
page 288

9.2 Improving education outcomes in Ceará, Brazil

5min
pages 296-297

Key policy directions to strengthen decentralized education financing

5min
pages 294-295

Introduction

2min
page 301

9.4 Pillars for central government education transfers to municipalities

4min
pages 284-285

governments

7min
pages 274-276

Conclusion

2min
page 265

References

3min
pages 268-270

Notes

7min
pages 266-267

8.2 Change in IDEB scores, 2005–17

1min
page 263

Impact of Brazil’s decentralized financing system on subnational spending and education outcomes

2min
page 258

in Ceará

4min
pages 253-254

8.10 Federal contributions to FUNDEB, 2007–17

2min
page 252

8.7 Brazil’s results on PISA, 2000–18

1min
page 245

8.1 Learning poverty in Brazilian municipalities, 2017

1min
page 244

8.1 Preuniversity education responsibilities of governments in Brazil

4min
pages 240-241

Introduction

4min
pages 237-238

References

1min
pages 235-236

7.9 Impact of total local expenditure on reading

2min
page 230

7.1 Distribution of education transfers as a zero-sum game

5min
pages 217-218

7.9 Subnational education spending by financing source, 2018

4min
pages 211-212

How is the system financed? Effects of decentralized financing system on subnational spending

2min
page 207

and 2018

2min
page 201

6.13 Transfers and education spending

1min
page 191

Context

1min
page 199

7.12 Allocation of education transfers, 2005–19

2min
page 215

6.15 Predicted education outcomes and district spending

1min
page 194

6.14 District spending and education outcomes

4min
pages 192-193

Introduction

1min
page 173

Fiscal transfer mechanisms

2min
page 183

References

12min
pages 168-172

Notes

9min
pages 165-167

Key policy directions to strengthen the decentralized education finance system

5min
pages 163-164

5.24 GERs in government primary schools, by LG, 2019/20

1min
page 155

and high primary GER and falling secondary GER, 1996/97–2019/20

1min
page 152

Effects of the decentralized finance system on subnational spending and education outcomes

4min
pages 150-151

Introduction

4min
pages 121-122

5.2 Government responsibilities under the Education Act

12min
pages 127-132

4.18 Fund flows in education

1min
page 109

for education

5min
pages 103-104

governments

2min
page 93

4.1 Population pyramid of Sudan, 2000–30

1min
page 90

4.9 Gender parity index, by state

2min
page 98

Notes

2min
page 82

Introduction

1min
page 89

References

10min
pages 83-88

Political economy constraints

2min
page 81

transfers for education

13min
pages 75-80

Education (FUNDEB

2min
page 66

Intergovernmental transfers

2min
page 48

3.3 Marginal effects of fiscal transfers on subnational education spending

5min
pages 61-62

3.3 The No Child Left Behind Act in the United States

5min
pages 72-73

outcomes?

5min
pages 70-71

Tax assignment

2min
page 47

Impact of fiscal transfers in education: A literature review

7min
pages 51-53
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