Public strongsectorstrong decentralization and school performance.pdfVIP

No. 39 october 2008 Torberg Falch Justina Fischer Learning and Peer Effects Public sector decentralization and school performance: International evidence Research Paper Series Thurgau Institute of Economics and Department of Economics at the University of Konstanz Public sector decentralization and school performance: International evidence + Torberg Falch and Justina AV Fischer* October 2008 Abstract Using a panel of international student test scores, 1980 – 2000, panel fixed effects estimates suggest that government spending decentralization is conducive to student performance. The effect does not appear to be mediated through levels of, or decentralization in, educational spending. JEL codes: C33; H2; I2, H40 Key Words: Fiscal decentralization; Student achievement; federalism; PISA; TIMSS; education; school quality Acknowledgement We thank Axel Dreher, Urs Fischbacher, Jan Schnellenbach, Bjarne Strøm and Roland Vaubel for helpful comments and discussions, and Dan Stegarescu and Daniel Treisman for sharing their data. Torberg Falch thanks the Thurgau Institute for Economics (TWI) at the University of Konstanz for generous hospitality. _______________________________________________________________________ + Department of Economics, Norwegian University of Science and Technology, Dragvoll, N-7491 Trondheim, Norway, e-mail: Torberg.Falch@svt.ntnu.no * (corresponding author), Thurgau Institute for Economics at the University of Konstanz, Hauptstrasse 90, CH- 8280 Kreuzlingen, Switzerland, e-mail: fischer@twi-kreuzlingen.ch or Justina.fischer@oecd.org 1. Introduction In political economy and public finance, the linkage between decentralization and the quality in the provision of public sector services has