0579-07 Economia/Galiani

D ecentralization is a major feature of current institutional innovation throughout the world. In Latin America, most countries have recently implemented decentralization policies following a long tradition of centralized government. Argentina has not been the exception. The decentralization of educational services from the federal to provincial governments was an important component of the structural reforms undertaken in Argentina in the early 1990s. The main argument in support of decentralization policies is that they bring decisions closer to the people. Information asymmetries, agency costs, and problems of collective decisionmaking can be alleviated through decentralization. Decentralization can worsen the provision of public goods, however, in the presence of positive spillovers, lack of technical capabilities by local governments, or capture of low-level administrations by the local elite. The theoretical literature identifies trade-offs without establishing universal superiority of either centralization or decentralization in the provision of public services. The problem needs to be analyzed empirically. In this paper, we evaluate the effect of secondary school decentralization on educational quality. Between 1992 and 1994, the Argentine