On the Use of Transparent Formulae to Allocate Federal Education Transfers

14 Pages Posted: 20 Apr 2016

Date Written: November 20, 2003

Abstract

One of the key questions that arise in discussions of education decentralization is how federal education resources should be allocated among the various states, and within states, among communities or schools. In general, there are two approaches: (1) bilateral negotiations between the federal government and states with little transparency as to the rules, and (2) formula-based distribution. Paqueo, Lopez-Acevedo, and Parandekar show that, based on econometric analysis on federal education transfers data in Mexico, the former approach can lead to allocation results that appear contrary to stated policy objectives like equity improvement and greater social inclusion in education.

The authors then argue that contrary to common belief, the use of capitation or per student allocation can improve not only efficiency but also equity. They present a theoretical model to analyze this hypothesis. The authors discuss several variations of the capitation formula, and present an analysis of the characteristics of the winners and losers of their application, using Mexico as an illustration.

This paper - a joint product of the Social Protection Sector Unit, the Poverty Sector Unit, and the Education Sector Unit, Latin America and the Caribbean Region - is part of a larger effort in the region to improve social spending.

Suggested Citation

Lopez-Acevedo, Gladys and Paqueo, Vincent and Parendekar, Suhas, On the Use of Transparent Formulae to Allocate Federal Education Transfers (November 20, 2003). Available at SSRN: https://ssrn.com/abstract=636590

Gladys Lopez-Acevedo

Lead Economist ( email )

1818 H Street
Washington, DC 20433
United States

HOME PAGE: http://www.worldbank.org/en/about/people/gladys-lopez-acevedo

Vincent Paqueo (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Suhas Parendekar

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
51
Abstract Views
1,079
rank
417,755
PlumX Metrics