Accountability and yardstick competition in the public provision of education

This paper explores the institutional change introduced by the public disclosure of an education development index (IDEB, Basic Education Development Index) in 2007 to identify the effect of education accountability on yardstick competition in educational spending among Brazilian municipalities. An exploratory analysis of the data shows a minor reduction (20%) in spatial interaction in public educational spending after IDEB disclosure-compared with the spatial correlation before disclosure of the index. Our main results explore a discontinuity around the cutoff of 30 students enrolled in the grade under assessment after IDEB disclosure. The estimates suggest that the spatial autocorrelation-and, thus, yardstick competition-is reduced by 52%. Falsification and robustness tests were performed and suggest that we can claim causality around small bandwidths of the cutoff. This finding suggests that the public release of information may decrease the importance of neighbors' information on voters' decisions.