Panel Paper: The Impact of Decentralization in Public Service Provision: When Does Local Discretion Matter?

Thursday, July 19, 2018
Building 5, Sala Maestros Lower (ITAM)

*Names in bold indicate Presenter

Ricardo Andrés Bello-Gómez and Claudia N. Avellaneda, Indiana University

Worldwide scholars and practitioners promote decentralization as a tool for improving and reinforcing governance. The notion is that the transfer of responsibilities to the local level increases both efficiency and accountability in the provision of public services. However, existing literature reports mixed results to this claim, suggesting that the expected benefits from decentralization are contingent on having proper local institutions and organizational capacity. As a result, some countries have recently adopted nuanced or conditioned decentralization reforms. Nevertheless, scarce research has assessed the impact of these conditional adoptions of decentralization. We study the case of conditional decentralization of education and health in Colombia. In 2001, Colombia adopted a framework to delegate responsibilities and transfer resources for education and health provision to those municipalities that exhibit certain degree of capacity and institutional quality. National government’s certification serves as a treatment on a difference-in-difference model. We assess the impact of this conditional decentralization on two indicators of education and health provision: high school enrollment and infant mortality rate. To do so, we built a panel dataset for certified and non-certified localities over a period of 18 years (1996-2013). We use propensity score to match the treated municipalities with a comparable set of untreated units. Furthermore, we also study the impact of this decentralization framework at the individual level for the case of health provision, using birth weight as an output. This research furthers the scholarly understanding of the impacts of decentralization on the provision of social services.