Kosec, Katrina2012-03-192012-03-192011-05-01https://hdl.handle.net/10986/3411What drives governments with similar revenues to publicly provide very different amounts of goods for which private substitutes are available? Key examples are education and health care. This paper compares spending by Brazilian municipalities on pre-primary education -- a good that is also provided privately -- with spending on public infrastructure like parks and roads, which lacks private substitutes. Panel data from 1995-2008 reveal how the distribution of income affects public investment. Revenue is endogenous to investment outcomes, and the analysis addresses this problem by exploiting a 1998, nationwide education finance reform and several revisions to the policy. The author constructs a variable that captures exogenous variation in revenue generated by nonlinearities of the law to instrument for observed revenue. Municipalities with higher median income and more inequality are less likely to allocate revenue to education or to expand pre-primary enrollment. They are more likely to allocate revenue to public infrastructure. There is suggestive evidence that this occurs for two reasons, hypothesized in two separate literatures. In rich and unequal municipalities, fewer total people support public education spending (the collective choice channel), and also, any given poor person wanting public education has less influence over policymakers there (the political power channel).CC BY 3.0 IGOACCESS TO SERVICESAGRICULTURAL PRODUCTSBASIC EDUCATIONBASIC EDUCATION INVESTMENTBENEFITS OF INVESTMENTBRIBESCHILD CARECITIESCLASS SIZEDATA ON STUDENTSDEMOGRAPHIC CHARACTERISTICSEARNINGSECONOMIC DEVELOPMENTECONOMIC POLICYECONOMIES OF SCALEEDUCATION EXPENDITURESEDUCATION FINANCEEDUCATION FUNDEDUCATION FUNDSEDUCATION SECTOREDUCATION STANDARDSEDUCATION SYSTEMELECTRICITYELEMENTARY EDUCATIONEMPLOYMENT OPPORTUNITIESENROLLMENT RATEENROLLMENT RATESEQUAL ACCESSEQUALIZATIONETHNIC GROUPSEXCHANGE RATEEXCLUSIONFELLOWSHIPFINANCESFISCAL FEDERALISMFORMAL SCHOOLINGGENDERGRADE LEVELSHEAD STARTHIGHER ENROLLMENTHOUSEHOLD INCOMEHOUSEHOLDSHUMAN CAPITALHUMAN DEVELOPMENTINCOMEINCOME DISTRIBUTIONINEQUALITYINTERGOVERNMENTAL TRANSFERSINTERNATIONAL BANKINTERVENTIONSINVESTMENT DECISIONSLABOR FORCE PARTICIPATIONLOCAL GOVERNMENTLOCAL GOVERNMENT EXPENDITURESLOCAL GOVERNMENTSLOCAL TAXESMAYORSMEDIAN VOTER MODELMUNICIPAL ELECTIONSMUNICIPAL GOVERNMENTMUNICIPAL GOVERNMENTSMUNICIPALITIESMUNICIPALITYPER CAPITA INCOMEPOLITICAL ECONOMYPOLITICAL POWERPOOR ACCESSPREPRIMARY EDUCATIONPRESCHOOL CHILDRENPRESCHOOL EDUCATIONPRESCHOOL ENROLLMENTPRIMARY EDUCATIONPRIMARY EDUCATION QUALITYPRIMARY ENROLLMENTPRIMARY ENROLLMENT RATEPRIMARY SCHOOLPRIMARY SCHOOL AGEPRIMARY SCHOOL CHILDPRIMARY SCHOOL STUDENTSPRIMARY SCHOOLSPRIMARY STUDENTSPRIMARY TEACHERPRIMARY TEACHERSPRIVATE EDUCATIONPRIVATE SCHOOLPRIVATE SCHOOLINGPRIVATE SCHOOLSPRIVATE SECTORPUBLICPUBLIC EDUCATIONPUBLIC EDUCATION SPENDINGPUBLIC EXPENDITUREPUBLIC FINANCEPUBLIC FUNDSPUBLIC GOODSPUBLIC INFRASTRUCTUREPUBLIC INSTITUTIONSPUBLIC INVESTMENTPUBLIC OFFICIALSPUBLIC POLICYPUBLIC PROVISIONPUBLIC RESOURCESPUBLIC SCHOOLPUBLIC SCHOOLSPUBLIC SECTORPUBLIC SECTOR COUNTERPARTSPUBLIC SPENDINGPUBLIC TRANSITPURCHASING POWERRECEIPTSREVENUE TRANSFERSROADSRURAL AREASSCHOOL ATTENDANCESCHOOL BUILDINGSCHOOL DISTRICTSSCHOOL FACILITYSCHOOL FINANCESCHOOL QUALITYSCHOOL TUITIONSCHOOLING QUALITYSOCIAL WELFARESTATE GOVERNMENTSTATE GOVERNMENTSTAXTAX COLLECTIONTAX REVENUETEACHERSTRANSPARENCYTREASURYUNIONUNIVERSAL PRIMARY EDUCATIONURBAN AREASURBAN DEVELOPMENTURBAN POORURBANIZATIONVILLAGEVILLAGESVOTERSWorld Bank10.1596/1813-9450-5647