Do More Decentralized Local Governments do Better? An Evaluation of the 2001 Decentralization Reform in Colombia

In this paper I evaluate the impact of the 2001 decentralization reform in Colombia. I use data from Colombia's municipalities. I look at the effect of the 2001 reform on enrollment in pre-college schools. While all municipalities received earmarked national transfers, with the reform some of then now have more responsibilities to provide education (deeper decentralization) than others. Particularly important, the reform entitle the more decentralized municipalities to sign subsidy contracts with private school. Departments (the regional governments) are entitle to sign this type of contracts for the less decentralized municipalities. Since the rule for municipalities to receive more responsibilities follows and exogenous population threshold, I can implement Regression Discontinuity Design. Enrollment is measured through two variables: the number of students enrolled in public schools and the number of subsidized students enrolled in private schools. Results suggest that more decentralized municipalities subsidize more students in private schools. The difference is significant at all the levels of pre-college school for the period 2004-2006. In 2005, the difference accounts for 20% of enrollment in private schools and 3% of population of school age. Besides, there are not significant differences among municipalities regarding enrollment in public schools