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Incentives for Mayors to Improve Learning

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Incentives for Mayors to Improve Learning Policy Research Working Paper 9509 Public Disclosure Authorized Incentives for Mayors to Improve Learning Evidence from State Reforms in Ceará, Brazil Public Disclosure Authorized Ildo Lautharte Victor Hugo de Oliveira André Loureiro Public Disclosure Authorized Public Disclosure Authorized Education Global Practice January 2021 Policy Research Working Paper 9509 Abstract Financial incentives for students, teachers, and schools are higher on mathematics and language tests. These impacts often used to promote learning. Yet, little is known about increase twofold when Ceará offers technical assistance to whether similar incentives for mayors produce analogous municipalities (pedagogical and managerial) and become findings. This paper investigates this question by exploring significant for fifth graders. These gains are seen among stu- a results-based financing reform in Ceará, Brazil, which dents in the top performance quantiles, but reformulating redistributes state resources to municipalities based on edu- the results-based financing rule to penalize municipalities cation performance. Comparing schools on both sides of with more low performers significantly reduces learning Ceará’s border over key implementation periods, the paper gaps. The paper discuss several mechanisms: the selection of shows that ninth grade students who were exposed to the school principals, teacher training, the provision and quality results-based financing performed 0.15 standard deviation of textbooks, curriculum coverage, and school homework. This paper is a product of the Education Global Practice. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted at [email protected]. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Produced by the Research Support Team Incentives for Mayors to Improve Learning: Evidence from state reforms in Ceará, Brazil ∗ y z y Ildo Lautharte Victor Hugo de Oliveira André Loureiro Keywords: Education Incentives for Mayors, Results-Based Financing, Technical Assistance. JEL Classification: H52, I21, I22. ∗We would like to thank Halsey Rogers, Pedro Cerdan−Infantes, Renata Lemos, Emanuela DiGroppelo, Caio Piza, Leandro Costa, Bruno Ottoni, and David Evans for the detailed comments. The authors gratefully acknowl- edge financial support from the REACH Trust Fund at the World B ank. We also thank seminar participants at the World Bank, Instituto IDados, Todos Pela Educação and Brazilian Society of Econometrics for valuable feedback on early drafts of this manuscript. The views expressed by the authors do not reflect the views of IPECE or the World Bank. All errors are, naturally, our own. The authors gratefully acknowledge financial support from the REACH Trust Fund at the World Bank. yEducation Global Practice, The World Bank Group zInstituto de Pesquisa e Estratégia Econoômica do Ceará 1 Introduction Much has been written on how financial incentives can play an important role in promoting student learning. Numerous studies have examined policies rewarding students based on pre- defined learning goals (Fryer 2011; Bettinger 2012). Others tested, and compared, particular configurations of student incentives across different ages, types of incentives and timeframes (Levitt et al. 2016). A not smaller field investigates the implications of conditioning scholarships on school attendance (Kremer et al. 2009); how to design effective pay-for-performance programs for teachers (Glewwe et al. 2010; Barlevy and Neal 2012); and the effects of distributing school grants based on education outcomes (Das et al. 2013; Gordon 2004). Such an abundance contrasts sharply with relatively no progress made on the design and impacts of similar incentives focused on city mayors. A context-specific reason for this imbalance may be the result of constitutional arrangements prohibiting top-down fiscal incentives tied to education performance. Or, when legally possible, it may not be politically feasible to design such incentives, because learning is argued to depend on factors outside of the control of the mayor (Hansen et al. 2004). Another explanation for limited empirical evidence is the lack of credible experiments linking financial incentives to education performance at the city level. This paper aims to investigate these gaps. It explores a state reform in Ceará, Brazil, in which state tax revenues are redistributed based on municipal competition on education outcomes. Different from many countries, Brazil provides an ideal opportunity to investigate education incentives to mayors because (i) there is administrative autonomy among federal, state and municipal governments and (ii) primary and lower secondary education are, in most cases, the responsibility of municipalities. In 2007, the state government also started to implement non-mandatory technical assistance (TA) for municipalities to address the heterogeneous capacity of municipal governments to implement education programs. The TA was initially targeted at literacy, and in 2011 was expanded to include support for grades 3 to 5. The state government provided pedagogical and management support to the municipal secretariats of education, including elements like scripted materials for teachers, teacher training focused on classroom practice, effective use of learning assessments, and knowledge exchanges between schools. Another important milestone of the education reforms in Ceará was the reformulation of the RBF rule in 2013 to penalize municipalities with higher percentages of students below minimum thresholds of performance in mathematics and language (Portuguese). Our empirical strategy explores this timeline and the location of schools across Ceará’s border in other states to identify RBF effects on learning at the end of primary (5th grade) and lower secondary (9th grade) education. Using data from students, teachers, and principals from the Sistema de Avaliação do Ensino Básico (SAEB), we compare the average differences in education outcomes on both sides of the border before and during each implementation stage.1 In total, this approach generates four parameters. To benchmark our findings and control for pre-existing disparities, we compute the baseline difference in pre-RBF periods (2005 and 2007). The second parameter refers to periods when the RBF was introduced without any complementary program in 2009. The third parameter measures the average difference in periods when the RBF was combined with TA (in 2011 for 5th grade, and in 2015 for 9th grade). The last difference considers the reformulation of the RBF rule in 2013 until 2017. We argue that, by comparing these parameters and controlling for student and municipal characteristics, time trends, and border fixed effects, it is possible to estimate whether financial incentives for mayors improved learning and the impacts of providing TA and reformulating the RBF rule. 1It is crucial to highlight two points in this strategy. First, SAEB is not part of the RBF rule in Ceará. Instead, Ceará bases the redistribution criteria on its own state assessment called SPAECE. SAEB is a national assessment with no influence on fiscal redistribution. In this context, using SAEB is empirically important, because it is less susceptible to gaming by municipalities. The second point concerns our definition of schools at the border. Throughout the analysis, we restrict our sample to schools located in the immediate three municipalities on each side of the border between Ceará and adjacent states (See Figure 1). We provide a set of robustness checks testing alternative border definitions. 3 This framework indicates positive and significant impacts of the RBF reform on student test scores. According to our estimates, students in 9th grade exposed to the RBF mechanism in Ceará presented 0:15SD higher scores in mathematics and Portuguese compared to similar students across the state border who were not exposed to the reform. This increase is equivalent, on average, to an additional 3 months of learning. In contrast, at this stage no clear improvement was observed for 5th graders. However, in periods when the RBF was combined with TA for municipalities, the effects of RBF alone almost doubled, and significant impacts on test scores for 5th grades emerge. The gains of combining RBF and TA for both grades is equivalent to 5 months of learning in Portuguese and 3 months in mathematics on the top of the effects of RBF alone. Further estimates, disentangling the TA component, indicate that most of these ‘’RBF + TA” effects come from providing training and textbooks to schools. Another particularity is the distribution of RBF effects. Quantile regressions show that RBF periods disproportionately benefited students at the top of the
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