Quality of Institutions on Education Policy Programs WHAT DOES MAKE DIFFERENCE IN BRAZILIAN EDUCATION POLICIES? Very Preliminary Version!!!! Carlos Pereira Professor, Getúlio Vargas Foundation – FGV/EBAPE 1. INTRODUCTION The benefit a country can extract from good education is a general consensus nowadays. The most important examples of countries that achieved economic development in the recent decades – South Korea, Taiwan, Singapore and Hong Kong – are associated to robust investment in primary education. So, improving the quality of education is the key to break the underdevelopment and to reduce inequality and social exclusion. Bruns, Evans and Luque (2012) identified many positive externalities of education. For these authors, a good system of education may lead to: (1) developing the labor force skills for sustained economic growth; (2) contributing to poverty and inequality reduction by providing educational opportunity for all; and (3) transforming education spending into educational results, especially student learning. (Bruns; Evans & Luque, 2012) Analyzing the Brazilian context, Menezes-Filho (2001) demonstrated that education is responsible for 26 percent salary difference between educated and not educated workers, and 40 percent of this gap when we weight by the number of hours worked. These numbers have generated growing concerns when one takes into account the most recent data on education in Brazil released by the Program for International Student Assessment - PISA in 2009. PISA reveals that Brazilian students perform rather poorly in comparative perspective, ranked 54th position among 65 countries. The Figure 1 shows that, although Brazil has improved its score on PISA in the last decade, its outcome is still worse than other developing countries like China or Poland as well as other Latin American countries such as Chile and Mexico. 1 Figure 1: PISA MATH PERFORMANCE FOR BRAZIL AND SELECT COUNTRIES. Source: OECD. Elaboration by Bruns, Evans and Luque (2012) Barros et al (2010) show that half of the recent decline in inequality in Brazil is due to changes in the distribution of labor earnings. The fall in labor income inequality, in turn, was primarily due to the fall in inequality in the distribution of labor income per working adult. On the other hand, they also show that the accelerated expansion of education over the last decade may have played an important role in reducing overall inequality. One factor that may explain this trend could be changes in access to education. The last decade was marked by an accelerated expansion of education in Brazil, more than twice as fast as the one that occurred in the 1980s. Estimates from PNAD show that in the last decade the average schooling of the Brazilian labor force increased by almost two completed grades, while in the previous decade the increase was of 0.7 completed grades. The authors argue that over half of the reduction in extreme poverty in 2001-2007 in Brazil was due to the reduction in income inequality (p. 137). Income inequality, in turn, decreased partly because of increasing access to education (p. 154). In their view increasing access to education decreases income inequality through three mechanisms: a decline in fertility; an increase in female labor force participation; and a reduction in labor income inequality (p. 154). Thus, if Brazil has the ambition to become a develop country in the near future, it is necessary to improve performance of the Brazilian’s public school. The fundamental question is, how do it? Several scholars and theories have tried to understand how to improve the primary education by many differences factors. Oliveira, Dourado and Santos (2007), 2 for instance, has demonstrated that the instruments required to improve education performance are associated with two dimensions: (i) extra-school dimension (socioeconomic and cultural and citizen’s rights and state obligation) and (ii) intra- school dimension (education infrastructure, school management practice, teacher level and student level). It is now a common wisdom the role-played by these instruments. An important funding program of the education public system particularly designed to backing these instruments is de FUNDEB (Fundo de Manutenção e Desenvolvimento da Educação Básica e de Valorização dos Profissionais da Educação). FUNDEB has been the main source of funding for basic public education in Brazil, especially at the municipal level. The fund consists of contributions (% of tax) made by federal government, states and municipalities. These contributions is distributed to states and municipalities based on number of student enrolled in public schools in a municipality. Thus, FUNDEB aims at reducing education inequalities between different regions of the country generated by social and economic differences. FUNDEB was instituted in 2007 is an evolution of FUNDEF (Fundo de Desenvolvimento do Ensino Fundamental). FUNDEF was created in 1998 and it performed an important role substantially increasing the expansion of primary education. After the implementation of this fund, almost all schoolchildren were enrolled. The difference between the FUNDEF and the FUNDEB is that whereas the former provided scale of children’s access to public schools the latter fundamentally expanded the contribution and destination of the resources. Another distinction is that the FUNDEF contemplates the primary school only, whereas the FUNDEB also includes the secondary school, pre-primary education and adult and youth education in addition to primary school. The FUNDEF and FUNDEB have had a considerable impact, especially in the Brazilian poor cities and states. Their main effects can be identified on teachers’ salaries given that 60 percent of these funds are spent with schoolteachers. The remainder has been allocated in other education cost. Figure 2 shows that FUNDEB increase significantly the fund’s revenue comparatively with FUNDEF. Figure 2: FUNDEF/FUNDEB EXPENDITURES 1998-2010 (in billions of constant 2010 Reais) 3 Source: National Treasury However, FUNDEB’s redistribution program does not generate the same outcome among states and municipalities, even those that have similar economic and social conditions. In fact, municipalities and states have different educational performance even with similar amount of resources transferred by the national government. What does account for these differences in educational performance? We also claim that in addition to those above-mentioned environmental and financial aspects, the quality of institutions, especially those responsible to check the political behavior of policymakers and politicians, have a direct impact on quality of public policies, including education (Melo and Pereira 2013). These authors also demonstrate that the degree of political competition matters to explain how governors at the subnational level behave predatorily or variously once in power in Brazil. However, they highlight that the positive effect of political competition of policy outcome is conditioned by the degree of institutionalization of checks and balance institutions. Therefore, in addition to descriptively show the distinct profiles and different performances Brazilian states present as a result of the FUNDEB program, the objective of this study also tests the impact of the quality of checks and balances institution and political competition on the performance of primary schools at subnational level in Brazil. Our preliminary econometric exercises indicate that quality of checks and balance institutions provides a governance-enhancing effect on the quality of primary school at the state level in Brazil. 4 2. THEORY The existing vast literature discusses different aspects that might impact on education performance. In fact, this literature highlights the diversity and the complexity of factors that may influence on education. Thus, it seems impossible to analyze the determinants of the improvement of student apprenticeship looking at to one perspective only. As mentioned before, Oliveira et al. (2007) identified two dimensions that influence the quality of education (extra-school and intra-school) in the Brazilian context. These authors make use of reports from UNESCO and from the World Bank to produce these dimensions. As the World Bank plays an important role in the diffusion of policy guidelines, it has stimulated countries to adopt the “best practice” in areas like education (Silva, Azzi and Bock, 2008). They named two factors as extra-school dimension: (i) socioeconomic and cultural, and (ii) citizen’s rights and State obligation. The intra-school dimension has others four factors: (i) education infrastructure (ii) school management practice (iii) teacher level, and (iv) student level. Extra-school dimension • Socioeconomic and cultural This aspect comprises cultural, social and economic conditions of families and students. The literature has many contributions showing evidence of positive relations between socio-economic status of families and students’ performance (Sirin, 2005; White, 1982). This relation is largely attributable the role of family in the scholar life of students. Davis-Kean and Sexton (2009), for instance, affirm that parents that have a high educational level have the conditions to offer a better home environment to learning process to their children. Ribeiro and Menezes Filho (2009) demonstrate that variables related of family structure represent 70 percent of the variation of students’ grades. Among them, the authors emphasize the