The Cost of Decentralization: Linguistic Polarization and the Provision of Education

44 Pages Posted: 16 May 2016

See all articles by Francesco Cinnirella

Francesco Cinnirella

University of Bergamo; University of Southern Denmark - Department of Business and Economics; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute; Centre for Economic Policy Research (CEPR); CAGE

Ruth Schueler

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

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Date Written: May 2016

Abstract

In this paper we argue that different preferences in a decentralized system lead to under provision of public goods. We analyze the provision of public primary education in nineteenth-century Prussia which was characterized by a linguistically polarized society and a decentralized education system. Using unique county-level data on education spending we show that linguistic polarization has a negative impact on local spending. Instrumental variable estimates using distance to the eastern border suggest that the relationship can be causally interpreted. Exploiting a reform of education spending, we show that centralization increases the provision of primary education relatively more in linguistically polarized counties.

Keywords: Centralization, Decentralization, education, Polarization, Prussia, Public Goods

JEL Classification: H41, H75, I22, N13, N33

Suggested Citation

Cinnirella, Francesco and Schueler, Ruth, The Cost of Decentralization: Linguistic Polarization and the Provision of Education (May 2016). CEPR Discussion Paper No. DP11274, Available at SSRN: https://ssrn.com/abstract=2780382

Francesco Cinnirella (Contact Author)

University of Bergamo ( email )

Via dei Caniana 2
Bergamo, 24129
Italy

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschingerstrasse 5
Munich, 81679
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

CAGE ( email )

Premier Business Centre
47-49 Park Royal Road
London, NW10 7LQ
United Kingdom

Ruth Schueler

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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