Corrupting Learning: Evidence from Missing Federal Education Funds in Brazil
This paper examines if money matters in education by looking at whether missing resources due to corruption affect student outcomes. We use data from the auditing of Brazil's local governments to construct objective measures of corruption involving educational block grants transferred from the central government to municipalities. Using variation in the incidence of corruption across municipalities and controlling for student, school, and municipal characteristics, we find a significant negative association between corruption and the school performance of primary school students. Students residing in municipalities where corruption in education was detected score 0.35 standard deviations less on standardized tests, and have significantly higher dropout and failure rates. Using a rich dataset of school infrastructure and teacher and principal questionnaires, we also find that school inputs such as computer labs, teaching supplies, and teacher training are reduced in the presence of corruption. Overall, our findings suggest that in environments where basic schooling resources are lacking, money does matter for student achievement.
We are grateful to Brian Knight and two anonymous referees for several insightful comments that significantly improved the paper. We are also thankful to the staff at the CGU for support and clarifications of the auditing process, and to Elaine Pazzelo and Roberta Biondi for help with the education data. We thank David Card, Miguel Foguel, Seema Jayanchandran, Enrico Moretti, Ted Miguel, Sergei Soares, Fernando Veloso and seminar participants at BREAD, GRADE, Ibmec-Rio, IPEA-Rio, Notre Dame, PUC-Rio, RAND, USP for comments and suggestions. Tassia Cruz, Carolina Grottera, Susana Cordeiro Guerra, Marcio Nery, and Sinaia Urrusti-Frenk provided excellent research assistance. Financial support from CCPR and CNPq is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Claudio Ferraz & Frederico Finan & Diana B. Moreira, 2012. "Corrupting learning," Journal of Public Economics, vol 96(9-10), pages 712-726.