Our work contributes to the existing literature by documenting, and investigating the determinants of, invalid birth certificates. We argue that individual and household characteristics and limitations in local capacity in registering births may translate not only into low birth registration rates but also the reliability of existing birth records; the latter metric is missing from existing micro-level data on birth registration rates that are widely used in this literature.

The remainder of this chapter is organised as follows. We first provide a conceptual discussion of factors that may undermine birth registration process in the presence of weak governance. We next give an overview of birth registration systems in LMICs and recent interventions to improve birth registration rates in Section 11.2, with a focus on innovations aimed at improving local institutional capacity. Section 11.3 describes the regulations and institutions underpinning the existing birth registration system in Bangladesh. We use data from our purposefully designed household survey to present descriptive statistics on birth registration rates in rural Bangladesh and highlight the issue of invalid birth registrations. In Section 11.4, we use a regression framework to investigate the determinants of birth certification as well as valid registration among unmarried adolescent girls and discuss whether differences in birth registration at the local level could be due to administrative capacity. The conclusions discuss the implications of our analysis.

#### **11.1 Birth registration systems and sources of weakness**

Policymakers and international development agencies have long recognised that an effective system for documenting births is critical for national governments to ensure that access to essential services and legal protection against various sorts of harm reach all children. Among advanced economies, most births are registered successfully within the recommended time period. By contrast, birth registration has not been a priory in the majority of low- and middle-income countries (LMICs), albeit with a few exceptions. Lack of resources is the most important reason for the absence of an effective birth registration system in many LMICs.

In LMICs there are vast differences in the birth registration facilities in urban and rural areas. However, there may be significant variation at the local level too because of political factors, cultural norms, and the knowledge, understanding, and priorities of parents. But there are other reasons why birth registration systems may be weak. Parents may not sufficiently value the services and protection provided by the state, or they may lack an understanding of the link between them and birth registration. Hence they may not take the appropriate steps to get registered. Perhaps just as importantly, they may not make political demands to ensure that the registration process is hassle-free and inexpensive. A recent review of the literature highlights both supply-side (legal barriers, poor infrastructure, limited resources) and demand-side factors (lack of sufficient perceived benefits net of costs) as factors contributing to low birth registration rates in LMICs (World Bank 2016).

It may also be that the legal protection provided by the state upon the registration of a child conflicts with traditional norms, or with the economic reality of the households in which the children are born. A case in point is the traditional practice of marriage among adolescent girls soon after they reach puberty, which often contradicts the legal minimum age of marriage within the country. In these instances, parents may be reluctant to register their children or, at any rate, may circumvent the process (for example, by misreporting a girl's birth date) so that they are able to continue with traditional practices.

Local governance typically plays an important role in the birth registration system, either by actively collecting information on births or by providing services that allow parents to register their children, issuing certificates, and so on. So, variation in the quality of local governance may lead to variations in the efficacy of birth registration systems across locality and thus contribute to inequitable access to government services and legal protection for children born in different parts of country.

A number of LMICs have long-standing civil registration systems. For example, in Botswana, a civil registration system was established at its independence, in 1966. At its inception, the registration of births and deaths was compulsory in towns and major villages only. But the registration of vital events became mandatory nationally in 1998. In 2003 Botswana's civil registration system was automated following the establishment of the Department of Civil and National Registration (Republic of Botswana and World Bank 2015). In the case of the Philippines, the registration of all vital events (births, deaths, and so on) was made mandatory in 1930 through the Civil Registry Act. But public awareness and compliance was low due to the general lack of understanding of the process, high costs, and cultural and language barriers

(Celeste and Caelian 2021). On the other hand, low per-capita-income countries – such as Armenia, Azerbaijan, China, Honduras, Kyrgyzstan, Mongolia, Sri Lanka, and Tajikistan – have managed to register at least 90 per cent of births (UNICEF 1998). Overall, birth registration in LMICs is characterised by low compliance. In Africa, one in seven registered children in school do not have a birth certificate (UNICEF 2013). However, there exists major variability across regions and countries. For example, about 50 per cent of school-registered children possess birth certificates in eastern and southern Africa, while the corresponding number is 88 per cent in west and central Africa.

Birth registration in Bangladesh

In recent years, a number of studies have investigated to what extent demand-side and supply-side factors limit birth registration. The existing research reveals that both parental/household-level characteristics and local/ contextual factors have been important determinants of birth registration. For example, using data from the India Human Development Survey-II, Mohanty and Gebremedhin (2018) found that the maternal autonomy and control over resources were important determinants of birth registration, but the marginal effects of maternal autonomy also varied across districts in India. Using data from the Demographic and Health Surveys for 34 countries in sub-Saharan Africa, Ebbers and Smits (2022) found that household poverty, lack of education, absence of the father, restricted autonomy of women, and belonging to a traditional religion affected registration negatively, but so did local factors such as lack of professional care during pregnancy, delivery, and early life and lack of local health care facilities. In a mixed-methods study of birth registration in south-eastern Kenya, Pelowski et al. (2015) highlighted a different issue. A quantitative survey in the region designed to better understand the current state of registration and parental understanding and attitudes revealed high levels of awareness and low barriers to birth registration – yet over 50 per cent of children in the sample were unregistered. Based on responses by parents during focus-group discussions, the authors concluded that:

a series of small annoyances [that is, non-monetary transaction costs], coupled with the lack of immediate incentive, … add up to a deliberate decision by a parent that it is *not worth the trouble* of seeking registration. (p.898)

They argued that this phenomenon may be present in other developing countries too.

In order to improve compliance with birth registration system, LMICs have introduced late fees, fines, and even judicial procedures. Such negative mechanisms could incentivise parents to complete birth registration on time. However, they could also create a burden for economically, socially, and geographically marginalised families (UNICEF 2013). Moreover, in some countries, existing laws make it more difficult to register children born out of wedlock or when the father is absent. Hanmer and Elefante (2015) gave a number of examples along these lines. In Egypt, the mother can register the birth of a child only if she provides proof of marriage. In Iran, both parents must appear before a civil registrar to register their child if their marriage has not been registered.

#### **11.2 Interventions to improve birth registration in LMICs**

In recent years, a variety of interventions have been introduced in LMICs to improve birth registration processes. They often include the use of digital technologies to transmit birth registration information from rural communities to local or regional administrative offices, and/or improving human resources available at the local government level for collecting and recording the information. We examine a number of examples from the literature, with a focus on innovations aimed at improving local institutional capacity, to illustrate both the range of solutions considered, as well as their potential pitfalls.

In Malawi, the government introduced a national registration system in 2007. This involved the use of paper-based village registers to record births and deaths as well as the number of people living in each village. The registers were maintained by the village head-persons, who were also responsible for obtaining and recording the required information for village members (Gadabu et al. 2014; Gadabu et al. 2018; Singogo et al. 2013). Although the system allowed the recording of births and deaths, it was impossible to collate and analyse the data from villages in a timely way due to poor infrastructure, limited human resources, and a poor transportation network. Paper registers were also easily damaged through manual handling or being eaten by termites.

In March 2013, a pilot project involving the use of electronic village registers (EVRs) was launched in a single Malawi village in an area without electricity and modern amenities (Gadabu et al. 2014). The EVRs were used to transmit data through wireless connections from the village head through a series of intermediaries to the District Commissioner. The EVR was designed to overcome challenges typical of rural communities in low-income countries: lack of electricity supply, low literacy levels, and lack of IT skills. In particular, the EVR set-up included a touchscreen computer to overcome the lack of IT skills, a solar panel to overcome the problem of lack of electricity supply, and a user interface in the local language to overcome the language barrier to using standard digital technologies. Based on the success of the pilot, the project was scaled up in 2016 to 83 other villages, with modifications to improve its user-friendliness and robustness (Gadabu et al. 2018).

Because of the low frequency of births and deaths at the village level, a village head in charge of an EVR typically interacted with the system just once every two to three months, which meant that operators had a low level of familiarity with the system, potentially leading to reporting errors. There were also cases of double registrations due to attempts to correct data entry errors, as well as under-reporting of births and deaths. Compared to the low

frequency of use, the EVR system also had a relatively high cost, at US\$2,430 per village (Gadabu et al. 2018).

Birth registration in Bangladesh

Tanzania's civil registration (CR) system is managed by the government's Registration, Insolvency and Trusteeship Agency (RITA) within the Ministry of Justice and Constitutional Affairs. The system is operated through district civil registrars (DCRs) and village executive officers (VEOs), who maintain in ledgers a record of births and deaths reported by households. Obtaining a birth registration certificate typically involves a series of visits by a relative to the VEO and the district civil registrar's office over the course of several weeks (Kabadi, Mwanyika, and de Savigny 2013). The system's lack of simplicity, coupled with lack of commitment from VEOs to regularly visit villages and households as required, is a potential reason why so few births were reported and registered.

The Swiss Tropical and Public Health Institute and the Ifakara Health Institute implemented a project in Tanzania between September 2012 and March 2013 to explore the potential of adding a mobile phone step to the CR system. The project, called 'Monitoring of Vital Events through the Use of Technology', or MOVE-IT, had its pilot in a rural setting and was developed to add a SMS technology process to the existing CR process. It aimed at improving the functioning of the CR system by enabling the village executive officers to electronically transfer the details of births and deaths to the district civil registrar through a cloud-based SMS platform. This would enable DCRs to effectively monitor households' compliance with the legally required reporting of births for registration and certification. It was expected that this would improve the rate of coverage of the CR system and lead to timely registration of births and deaths. The MOVE-IT project raised the rate of birth notifications by an impressive 86 per cent by the end of the intervention period. The change in the number of birth certificates issued was, however, less impressive, rising by just 9 per cent by the end of the intervention (Kabadi, Mwanyika, and de Savigny 2013).

The use of Tanzanian government civil servants as VEOs created conflicts between their routine jobs and CR duties, leading to few visits to households and villages to follow up on birth events. Some VEOs preferred not to pay visits to villages but required parents of newborns to make trips to their offices for the registration of births. This situation affected the reporting of births as well as the rate of registrations. Second, getting contractual agreements from mobile network providers to enable VEOs to use their mobile phones for reporting events was problematic, adding to the inefficiency of the system and lowering the impact of the MOVE-IT project. In terms of coverage, some villages could not participate in the project due to a lack of mobile phone network coverage (Kabadi, Mwanyika, and de Savigny 2013).

Birth registration in Ghana is a legal requirement under the Registration of Births and Deaths Act (1965). The country is divided into 170 registration districts, each with at least one registration office. These offices are usually within the premises of or near public health facilities. Despite this legal framework, the registration of births in Ghana was plagued by a shortage of registration offices and a lack of trained personnel, and this problem was particularly severe in rural areas. In most cases, the distance to the nearest registration office added substantial indirect costs (such as time away from work and travel expenses) to the monetary cost of registering a child. Public awareness of the benefits of child registration seemed generally low (Fagernäs and Odame 2013).

To address some of these challenges, Plan International and UNICEF collaborated with the Ghana Births and Deaths Registry to launch a birth registration campaign between 2004 and 2005. The campaign aimed at extending the legal period for free registration of infants, incorporating birth registration in child health promotion weeks, training community health workers on how to register births quickly, using community registration volunteers, and registering children during celebrations (Fagernäs and Odame 2013). Over the campaign period, the registration of births increased substantially as birth registration services became easily accessible and the need to travel long distances to a registration centre was removed. While only 44 per cent of children younger than five years were registered in 2003, the rate had increased to 71 per cent by 2008. However, a full coverage of birth registration has yet to be achieved amid slowing progress.

A second initiative to boost the progress of birth registration in Ghana was the implementation of a low-cost 'real-time' vital registration system launched in 2006 in the Bonsaaso Millennium Village in the Ashanti Region. It integrated 'real-time' vital registration with a verbal autopsy system within an open-source electronic medical record to improve the coverage of maternal child health services. The project involved training community health workers (CHWs) to deliver health information and services to households, gather data on vital events (births and deaths), and transfer the information to the OpenMRS (a medical record system) using introspective data entry (Ohemeng-Dapaah et al. 2010).

The project led to a rise in the number of health facilities established, reducing the travelling distance for households. The number of professional health workers trained in the project area also rose, including skilled birth attendants and CHWs, and led to a shift in births from home delivery to delivery at health clinics. Thus, births became more visible and were registered more promptly (Ohemeng-Dapaah et al. 2010). The project was largely successful because birth registrations seemed accurate and easy to implement. It is worth noting here that a high level of community mobilisation as well as an awareness and appreciation of the work of the CHWs was essential to its success.

In Liberia, after the second civil war (1999−2003), birth registration was reinstated as part of the government's post-reconstruction and development efforts. It was recognised that every child had a right to be registered and efforts were made by the government to ensure that the country had a well-functioning and sustainable CR system. The process of birth registration was centrally managed by the Ministry of Health and Social Welfare (MoHSW) from offices in the capital city, Monrovia (Virhiä et al. 2010). This

centrally controlled process proved very inefficient because most of the citizens found it difficult to travel to the capital city to register a child's birth. As a result, only about 5 per cent of children under the age of five were registered in 2007 (Toivanen et al. 2011).

Birth registration in Bangladesh

The government eventually embarked on a decentralisation of the birth registration process. This involved the establishment of health districts across the country, appointing county registrars (CRs), district health officers (DHOs), and general town chiefs (GTCs) to provide birth registration services at their respective levels of jurisdiction. The process of registering a birth now began with a visit by the DHO to the village or community to collect already-filled registration forms from the GTCs. These were forwarded as was by the DHOs to the county registrar's office and then to the national office of the MoHSW in Monrovia for processing. Birth certificates would then be printed at the central level and sent back to households through the DHOs and local chiefs. Although easy to implement, this paper-based decentralisation had several drawbacks including the possible loss of information through the manual handling of forms, the difficulty of interpreting handwritten information among third parties, and the need to transfer information from paper-based forms to a digital database. These issues often created huge pressure on the central office personnel, leading to long delays in the registration process (Virhiä et al. 2010).

A mobile birth registration (MBR) project was launched in 2009 as part of the Liberian government's Crisis Management Initiative, to complement the manual registration process (Virhiä et al. 2010; Toivanen et al. 2011). The MBR was designed to facilitate the collection of birth registration data in rural communities, minimise the need for households to travel long distances to provide registration information, and reduce the issuing time for birth certificates. The project utilised the Nokia Data Gathering (NDG) solution in gathering information on births from households. This was then transmitted to the central birth registration database. At the same time, county registrars could download files to their electronic devices and print corresponding birth certificates for households within their respective counties. The pilot scheme, launched in a single county, achieved its goal of making birth registration services easily accessible to rural households in its area, which then informed the government's plans to scale up the mobile birth registration project to all the counties in the country.

The discussion above illustrates how interventions in LMICs aimed at decentralising birth registration have had mixed results. In instances where the decentralisation process has been accompanied by comprehensive capacitybuilding and mobilisation at the local level (for example, in Ghana and Liberia) the results have been impressive. But there have also been cases where local authorities lacked the capacity to adopt the innovations introduced (as in Malawi and Tanzania), so that the interventions ultimately did not realise their objective of improving birth registration rates in the long run. Yet, in addition to local administrative capacity, the existing literature also highlights a range of factors that lead to low registration in LMICs including lack of public awareness of the process; the distance to and difficulty in accessing registration offices; the monetary cost of registration; the limited autonomy of mothers and often the absence of the father; and parents perceiving only small benefits from registration.

#### **11.3 Birth registration in Bangladesh's rural areas**

The authority responsible for birth registration in Bangladesh is the LGD, Local Government Division (and its associate agencies), while oversight of the process is done by the Civil Registration and Vital Statistics (CRVS) secretariat under the government's Cabinet Division (PLAN-Bangladesh and EATL 2020). The LGD's registration activities are governed by the 'Birth and Death Registration Act 2004' and operated by the Registrar General Office under LGD. LGDs operate in each of the eight divisions in Bangladesh, covering all 64 districts of the country. At the district level, birth registration is predominantly done by the union parishad (UP), the lowest tier of local government administration in Bangladesh – except for urban areas and cities where the birth registration is done by the municipality or the city corporation, respectively. The UP is headed by an elected representative who works under the subdistrict administration, known as 'upazila parishad'. As part of the 'Digital Bangladesh' mandate introduced in 2008, the Bangladesh government established union digital centres (UDCs) in almost all the UPs in Bangladesh, operated under a public–private partnership model, combining a government facility and a local entrepreneur as a service delivery agent. UDCs are equipped with computers and internet connections, facilitating one-stop service delivery for various services, including birth certification digitisation.

According to the current law (Birth and Death Registration Act 2004), it is mandatory to register birth for anyone born in the country irrespective of race, religion, or nationality. The rule specifies that the birth registration of newborns should be completed within 45 days of birth (UNICEF2015). If the registration is completed within two years of birth, there are no fees associated with this process. However, registration after two years entails paying various fees based on the fee structure depicted in Table 11.1. (The detailed application and verification processes are described in Table A1 and Figure A1 in this chapter's Supplementary Materials.5 )

According to the 2004 Birth and Death Registration Act, a birth certificate is required documentation for enrolment in the government primary schools, registering marriages, and obtaining passports and national ID cards. Although a birth certificate is, officially, a document required for admission into schools, the rule may not be universally enforced. Hence the compliance rate is imperfect, especially in rural areas (see below). The 2004 Birth and Death Registration Act came into force in 2006 and, over the next five years, the birth registration rate for children under five increased sharply from 12 to 31 per cent (UNICEF 2013). However, the registration rate declined thereafter, reaching 20 per cent in 2014 before increasing again to

**Table 11.1: The fee structure for birth registrations in Bangladesh**

Birth registration in Bangladesh

Source: UNICEF (2015).

Note: Figures are for Bangladesh Taka (BDT) charged. BDT 94 = US\$ 1 (as of 5 July 2022).

25 per cent in 2017−18 (NIPORT 2020). There is significant regional variation in registration rates, from 17 per cent in Rajshahi Division to 34 per cent in Sylhet Division.

Focusing down specifically on rural Bangladesh, we next provide evidence on birth registration patterns based on a purposefully designed survey conducted in 2020 called the Gaibandha Birth Registration and Helplines Survey. Survey data on birth registration of children is presently available for a wide range of countries. In particular, the MICS (Multiple Indicator Cluster Surveys) have collected birth registration data since 1999 and the DHSs (Demographic and Health Surveys) have collected birth registration data since 1993. What makes the present survey in rural Bangladesh distinctive is that it includes not only self-reported data on birth registration but also independent checks on birth certificates against the national birth registration database for a particular demographic group, namely unmarried adolescent girls, for whom certificates numbers were recorded during the survey.

#### Our survey and descriptive statistics

The study sample for the 2020 Gaibandha Birth Registration and Helplines Survey was drawn from 240 communities (specifically subunits of villages called '*paras*') in the district of Gaibandha in northern Bangladesh.6 The communities are spread across five unions that are broadly similar in terms of population and geographic size as reported in Table 11.2.

The process of identifying sample households was as follows. In late 2019, for each village included in the study, the research team requested community elders to identify households within the village with unmarried girls in the age group 13 to 17 years. This exercise produced an initial listing of 2,498 households with unmarried adolescent girls in the 240 communities. The rationale for this sampling strategy is that the data collection was linked to a subsequent invention aimed at reducing the incidence of female early marriage in the study communities.

A household survey was conducted in the listed households between February and March 2020, which provided two key types of information. First,

#### **Table 11.2: The areas, populations and households in the five unions used for the study sample**

Note: Taken from Bangladesh Population Census 2011. Numbers rounded to nearest 10.

the household head reported on the birth registration status of each member of the household. Second, for unmarried adolescent girls in the household, the enumeration team verified whether the girl had a birth certificate, and subsequently checked whether the certificate with that number had a digital record in the national birth registration database. The survey also included questions aimed at testing knowledge and understanding of the birth registration process among the mothers of unmarried adolescent girls.

In addition to the quantitative survey, we conducted qualitative interviews and focus-group discussions with local stakeholders to understand the local administrative capacity. We also conducted semi-structured interviews with the UDC private sector entrepreneur responsible for birth registration in each of the five unions covered in the survey and collected the information that they follow during birth registration and digitisation of existing birth records. We checked the IT and other equipment available for birth registration work within the office, and the interviewer also noted observations on the available equipment and office set-up. We report on the additional findings gathered in this way after reporting the findings from the quantitative analysis.

Table 11.3 presents summary statistics on the characteristics of the survey households. On average, households had 4.9 to 5 members and about 79 per cent of them owned land. The household head averaged 45 years with 3.15 years of education, and about 11 per cent of household heads were women. These characteristics make the sample households typical of rural households in Bangladesh.7 However, due to our focus and sampling strategy, the households had more than twice as many girls as boys (on average 1.6 girls and 0.7 boys below age 18). The marriage rate was about 1.8 per cent among adolescent girls aged 13−17 years, much lower than the national average.8 Nevertheless, the survey data can provide important insights about birth registration patterns in rural Bangladesh and their determinants.

#### Birth registration status and knowledge

Table 11.4 presents summary statistics for *each household member* recorded in our survey. The third row of the table shows that household heads reported

**Table 11.3: Characteristics of households in our survey**

Birth registration in Bangladesh

Source: 2020 Gaibandha Birth Registration and Helplines Survey and authors' calculations. See Section 11.3 for further details about the survey.

Note: In 51 households, no member present is designated as the head. SD: Standard deviation. The range shows minimum to maximum. Categorical variables were coded either 0 or 1.

birth registration had been done for 67 per cent of the household members. But there was significant variation in birth registration by demographic group. Figure 11.1 shows the birth registration rate by sex and age for children up to age 18. For children aged 24 months or younger, the number was 58 per cent for boys and 45 per cent for girls. The registration rate increased to about 60 per cent for children aged three to six years, with girls in this age nearly catching up but still lagging behind boys. For children aged seven to 12 years, the number was 85 per cent for boys and three points higher for girls. This suggests that a significant proportion of birth registration takes place at when a child enters school. Within the same age group, only one in 100 have never been to school, implying that more than one in eight boys and girls aged seven to 12 had enrolled in school without a birth certificate. So, there is still imperfect compliance with the legal requirement that a birth certificate is shown when a child is enrolled in school. Household heads reported that birth registration had been done for 95 per cent of adolescent girls aged 13 to 17 years.

Source: 2020 Gaibandha Birth Registration and Helplines survey and authors' calculations. Note: SD: Standard deviation. The range shows minimum to maximum. Categorical variables were coded either 0 or 1.

However, information from the validity checks on the birth certificates of adolescent girls paints a somewhat different picture. Table 11.5 presents summary statistics for the 2,643 unmarried adolescent girls aged 13−17 included in the households in our survey. In contrast to the figure provided by the household head, a birth certificate could be produced for only about fourfifths of the girls.9 Only 58 per cent of adolescent girls had a birth certificate that passed the research team's validity check, that is, a certificate with a digital record in the national birth registration database.10

We found some variation by union in the proportion of adolescent girls for whom a birth certificate could be produced, ranging from 85 per cent

**Figure 11.1: The birth registration of children in our sample, by sex and age**

Birth registration in Bangladesh

Source: 2020 Gaibandha Birth Registration and Helplines survey and authors' calculations.

in Vorotkhali union to 74 per cent in Uria union. But the differences in *validated* birth certificates across unions are more pronounced, ranging from two-thirds in Gojaria union to under two-fifths in Udakhali union. The differences in our two measures of birth registration across the 240 communities in the sample are even more striking: there are four communities where *all* adolescent girls have validated birth certificates and several where *none* of them do. Figure 11.2 shows a scatterplot by community of the proportion of adolescent girls for whom birth certificates could be shown and validated – with wide variation in both measures across the communities.11

In Table 11.6 we present summary statistics on an adult household member's knowledge about birth registration. These questions were intended for the mother of the adolescent girls in the household but, in cases where the mother was unavailable (about 16 per cent of cases), the question was asked of the father. Almost all respondents had heard about birth registration (99 per cent), knew where to go to register a child (94 per cent), and that a child could be registered once only (92 per cent). But less than half knew that the registration had to be done within 45 days of birth, and less than a quarter

**Table 11.5: Summary statistics for adolescent girls in the survey**

Source: 2020 Gaibandha Birth Registration and Helplines Survey and authors' calculations. Note: SD Standard deviation. The range shows minimum to maximum. Categorical variables were coded either 0 or 1.

could mention a correct way of checking the validity of a birth certificate. On average, the respondents could mention about 2.9 reasons for, or advantages of, registering a child, with the number of reasons provided ranging from 0 to 7.

We find some improvement in knowledge about birth registration by the level of education. Figure 11.3 shows the values of two of the knowledge variables by level of education, for adult female respondents only. The proportion who were able to mention at least one correct method for checking for birth registration validity increased with respondents' level of education, from about 15 per cent among women with no education to about one-third for women in the sample who have completed secondary or higher education. Knowledge about when to register a child showed an increase with secondary education or above. We did not find a relation for the other knowledge variables (numbers not shown here).

**Figure 11.2: The proportion (%) of validated birth certificates in communities by the proportion (%) showing a certificate**

Birth registration in Bangladesh

Source: 2020 Gaibandha Birth Registration and Helplines Survey and authors' calculations.

#### **11.4 Determinants of birth registration among adolescent girls**

To better understand the factors behind the invalid birth certificates discussed in the previous section, we explore the determinants of birth registration status of adolescent girls in our survey sample within a regression framework. Specifically, we estimate linear probability models of the following form:

$$BHS\_{ihvu} = \alpha + \mathbf{X}'\_{ihvu}\beta + \mathbf{Z}'\_{hvu}\gamma + \mathbf{N}'\_{vu}\eta + \mathbf{e}\_{ihvu} \tag{1}$$

where *BHSihvu* is a binary variable indicating the birth registration status of person *i* in household *h*, community *v*, union *u*; *Xihvu* is a vector of individual characteristics; *Zhvu* is a vector of household characteristics; *Nvu* is a vector of gender norms measured at the community level and ∈*ihvu* is the error term. Finally, *α*, *β*, *γ* and *η* are vectors of parameters to be estimated. In a second specification, we add fixed effects at the level of the union as follows:

$$BHS\_{ihvu} = \alpha + X\_{ihvu}'\beta + \mathbf{Z}\_{hvu}'\gamma + \mathbf{N}\_{vu}'\eta + \mathbf{d}\_u'\,\,\delta + \,\varepsilon\_{ihvu} \tag{2}$$

where *d<sup>u</sup>* is a vector of union dummies in registering births and issuing certificates. As each union falls under the jurisdiction of a different UDC that registers births and issues certificates, sizeable union-level fixed effects may

#### **Table 11.6: Summary statistics on adult knowledge**

Source: 2020 Gaibandha Birth Registration and Helplines Survey and authors' calculations. Note: SD: Standard deviation. The range shows minimum to maximum. Categorical variables were coded either 0 or 1.

indicate variation in local administrative capacity in registering births and issuing certificates. In a third specification, we replace the union fixed effects with community fixed effects (and drop the community-level gender norms) as follows:

$$BHS\_{ihvu} = \ \alpha + \mathbf{X}'\_{ihvu}\beta + \mathbf{Z}'\_{hvu}\gamma + \mathbf{c}'\_{vu}\delta + \mathbf{e}\_{ihvu} \tag{3}$$

where *cvu* is a vector of community dummies. Although all communities within the same union are covered by the same UDC, there may be significant differences between them because of local transmission of information and attitudes, and imitation of good or bad practices across neighbours. There may also be systematic variation across communities in terms of wealth and occupational composition of households, as well as attitudes towards child marriage and female schooling. Sizeable community-level fixed effects would indicate that at least some of these factors are important determinants of birth registration.

Table 11.7 reports on estimates of Equations [1] to [3] using the availability of *any birth certificate* as the dependent variable. The explanatory variables

**Figure 11.3: Knowledge of birth registration versus education**

Birth registration in Bangladesh

Source: 2020 Gaibandha Birth Registration and Helplines survey and authors' calculations.

®

#### **Table 11.7: Determinants of any birth certificate for unmarried girls in the household**

*(Continued)*

#### **Table 11.7: Continued**

Birth registration in Bangladesh

Source: 2020 Gaibandha Birth Registration and Helplines Survey and authors' calculations. Notes: Standard errors are in parentheses and italics. \*\*\*p < 0.01, \*\*p < 0.05, \*p < 0.1. The abbreviation h'head means head of household. Errors are clustered at the community level. The dependent variable indicates whether the adolescent girl has any type of birth registration whether valid or invalid. The sample includes all unmarried adolescent girls in the study area. In the third column the reference union is Gojaria.

include the age of the girl, household demographic characteristics, education level of the mother and the household head, the mother's knowledge about birth registration, and 12 distinct measures of community gender norms. We interpret the estimated coefficients not as causal effects but as indicating the predictive ability of a range of predetermined characteristics.

Before discussing the results, it is also worth noting that, because the sample includes *unmarried* adolescent girls only, the estimated coefficients may be affected by selection bias. In particular, if certain socio-economic characteristics reduce risk of early marriage as well as positively affect birth certification, this will lead to a downward bias in our point estimates. For this reason, in the following discussion we focus primarily on the community-level and union-level variables: as community and union-level factors are less likely to affect marriage timing than household and individual-level factors.

Of the explanatory variables, the only one that 'affects' the probability of having a birth certificate across all three specifications is the mother's level of education. In fact, other things equal, if the mother has secondary or higher education, the girl is about 8 to 10 percentage points *less likely* to have a birth certificate than one whose mother has never attended school. We also find that three of the gender norm variables have predictive power regarding the presence of a birth certificate in both specifications that they are included: the proportion of respondents in the community who agree with the statements that 'A man should be the sole decision maker', 'Girls should marry before 18', and 'Secondary school education is more important for a boy than for a girl'. Increased agreement with any of these statements within the community decreases the probability that a girl has a birth certificate.

The individual, household, and community characteristics explain just 4 per cent of the variation in birth certificates among adolescent girls, as indicated by the R-square in column 1 of Table 11.7. The inclusion of union fixed effects in column 2 improves the R-square only slightly to 0.058. The estimated coefficients for the union dummies indicate some variation in the birth certification rate across unions: in Uria, the rate is about 11 percentage points lower than in the reference union (Gojaria) and about 19 percentage points lower than in Vorotkhali. The inclusion of community fixed effects improves the R-square to 0.171. Thus, a significantly larger part of the variation in birth certification is explained by differences across communities (that, within union boundaries, are served by the same local authority) rather than at the union level.

Table 11.8 reports on estimates of Equations [1] to [3] using the availability of a *valid* birth certificate as the dependent variable. The explanatory variables are identical to those in Table 11.7. Again, we find that the only explanatory variable that 'affects' the probability of having a valid birth certificate across all three specifications is the mother's level of education, but in a perhaps surprising way (see below): an adolescent girl whose mother has secondary or higher education is about 10−12 percentage points *less likely* to have a birth certificate than one whose mother has never attended school. Unlike the case

**Table 11.8: Determinants of valid birth certificate for unmarried girls in the household**

Birth registration in Bangladesh

*(Continued)*

#### **Table 11.8: Continued**

Notes: Standard errors in parentheses. \*\*\*p < 0.01, \*\*p < 0.05, \*p < 0.1. Errors are clustered at the community level. The dependent variable indicates whether or not the adolescent girl has a birth certificate identified as 'valid' by enumerator. The sample includes all unmarried adolescent girls in the study area. In the third column the reference union is Gojaria.

of any birth certification, none of the gender norm variables consistently predicts valid birth certification.

Birth registration in Bangladesh

The individual, household, and community characteristics explain just 2 per cent of the variation in valid birth certificates among adolescent girls. The inclusion of union fixed effects improves the R-square substantially to 0.07. And we obtained larger differences in the rates of valid birth certification across unions compared to the case of any birth certification discussed above. In the Udakhali and Vorotkhali unions, the rates were 28 and 22 percentage points, respectively, lower than in the reference union, Gojaria. In another union, Uria, the valid birth certification rate is also lower than in the reference union by eight percentage points. The inclusion of community fixed effects improves the R-square further to 0.22.

The persistently negative coefficient in Tables 11.7 and 11.8 for the dummy variable corresponding to the attainment of secondary or higher education by mothers merits further comment. At first sight, the pattern is puzzling since women with secondary education appear to have better knowledge about birth registration (Figure 10.3). But recall that the sample used for the regression analysis includes only *unmarried* daughters. Mothers with less education are more likely to have *married* adolescent girls (confirmed in our data), who are, thus, absent from the sample. If married adolescent girls have a lower birth registration rate (which we cannot confirm on the basis of our data as reliable birth certification data was collected for unmarried adolescent girls only but is a plausible hypothesis), this would inflate, within the sample, the birth registration rate for girls whose mothers have less education compared to girls whose mothers have completed secondary education.12

#### **Conclusions**

Using the estimates in column 3 of Tables 11.7 and 11.8, we can calculate the predicted probability of having any birth certificate and a validated birth certificate by community. Figure 11.4 shows the distribution of these predicted probabilities across communities using sample mean values of all other covariates in the respective models. Both distributions are single-peaked and, as expected, the mode of the distribution of the predicted probabilities of validated birth certificate was lower than that for any birth certificate. More strikingly, we observed a much wider spread in predicted probabilities across communities in the case of validated birth certificates. This pattern was also reflected in the predicted probabilities calculated at the level of the union shown in Table 11.9.

These patterns raise the question whether the differences in valid birth certification among adolescent girls across unions could be attributed to local institutional capacity to register births and maintain birth records. In focusgroup discussions on birth registration with local stakeholders, participants highlighted a number of governance issues leading to low compliance:

#### **Figure 11.4: Predicted birth registration probability for adolescent girls by community**

Notes: The probability density function is used to specify the probability of the variable falling within a particular range of values, as opposed to taking on any one value. It need not fall in the range 0–1. The probability is given by the area under the curve.

#### **Table 11.9: Predicted probabilities for a birth registration certification (BRC) of adolescent girls in our sample across unions**

Source: 2020 Gaibandha Birth Registration and Helplines Survey and authors' calculations. Notes: The table shows the predicted birth registration probabilities for adolescent girls by union based on the estimates in column 2, Tables 11.7 and 11.8. Sample mean values are used for all other covariates.

• unqualified persons being assigned to the UDC, and unrealistic targets set by the Bangladeshi government to process birth registrations within a set time frame without sufficient investment in capacity-building.

Birth registration in Bangladesh

The semi-structured interviews with the five UDC private sector entrepreneurs also revealed a lot of variation in their technical and management capacity, in terms of educational qualifications, IT training, training on digitisation of birth registration records, and practices in terms of documentation, security, file management, and archiving records.13

In the absence of systematic large-scale data on local institutional capacity, it is difficult to verify to what extent the issue of invalid birth certificates is due to local institutional capacity. However, we highlight here some suggestive evidence in line with this hypothesis. There are large differences in the *overall* self-reported birth registration rates (more precisely, as reported by the household head) across the five unions covered in our survey: the percentage rates were 86 in Gojaria, 77 in Uria, 66 in Vorotkhali, 65 in Udakhali, and 52 in Kanchipara. Given that these unions are broadly similar in terms of their demographic composition, and that there is little reason to expect systematic differences in reporting errors across unions, these numbers can be interpreted as rough indicators of local institutional capacity relating to the creation and maintenance of birth registration records.14

The variation in birth registration rates across unions suggests that there are large differences in local institutional capacity. Moreover, the ordering of the unions in terms of their overall birth registration rates is similar to the ordering implied by the predicted valid birth registration probabilities in Table 11.9 – albeit with the exception of the Kanchipara union. This pattern suggests that variations may be due to differences in local institutional capacity. More precisely, the differences in the technical and management capacity of UDC entrepreneurs observed through the semi-structured interviews (in terms of IT training, training on digitisation of birth registration records, and the adoption of practices for documentation, security, file management, and archiving records) are plausibly responsible for at least part of the variation in validated birth registration certificates across unions.

In theory, decentralisation should improve efficiency in governmental activities that require reliable local information. Well-known examples are real estate and property tax collection (since tax assessment requires property valuation), which can be done far more accurately at the local level rather than by a central administration. Similarly, conducting vital registration (including birth registration and the digitisation of birth records) at the lowest administrative level allows the use of localised information support and lowers transaction costs. Although decentralisation should make these processes more cost-effective, weaker administrative capacity due to supply-side issues (such as corruption, nepotism, inadequate infrastructural support, and inexperienced service providers) could dilute decentralised efforts of providing birth registrations locally. Such problems can make the compliance standard of such activities questionable, with potentially important consequences on public policy responses in other vital areas.

We have explored this issue in a setting where valid birth registration could potentially help to reduce the incidences of female early marriage. Bangladesh has one of the highest rates of female early marriage in the world. The latest figures indicate that about 59 per cent of women marry before reaching the age of 18 (Amin et al. 2019). The practice is strictly prohibited by the Child Marriage Restraint Act 2017. But law enforcement agencies require a valid documentation of age to take necessary action against the practice, while the current birth registration rate in Bangladesh is far from universal. Although there are demand driven issues – for example, lack of awareness on the importance of the birth registration by rural parents (many of them are low-educated and often illiterate) – we provide suggestive evidence of substantial supply-side constraints.

Evaluating the birth registration issues of a rural district in Bangladesh, we documented that nearly one-third of the sample did not have their birth registered at the time of the survey, with a sizeable gender gap for children aged 0−24 months (58 per cent of boys were registered compared to 45 per cent of girls). For girls aged 13−17 years (an age group that is highly susceptible to female early marriage), the household was able to show the birth registration document in 80 per cent of cases. However, the research team's validity check against records in the national database revealed that, of the birth registration documents produced by the households during the survey, 46 per cent were, in fact, invalid.

The survey also revealed that, while most rural households have basic knowledge about birth registration, fewer than half knew the deadline for completing the registration without incurring a registration fee, and less than a quarter knew how to check the validity of a birth certificate. What is more striking is the local-level variation in compliance rates. Our estimates indicate that there are statistically significant discrepancies in the local government's ability to produce valid birth certificates, ranging from 39 per cent to 67 per cent across five local authorities within a single district in Bangladesh. Relatedly, using data drawn from semi-structured individuals with the entrepreneurs responsible for birth registration at the union-level, we find large differences in terms of educational qualifications, IT training, training on digitisation of birth registration records, and practices (data security, file management, archival procedures) across the UDCs. And differences across unions explain a much larger fraction of the variation in *validated* birth certificates than the presence of any certificate. We argue that the issue of invalid certificates is a problem stemming from limited administrative capacity at the level of the local authority.

We conclude with two policy implications of our findings. The differences in qualifications, resources, and processes across union digital centres were evident from our engagements with UDC entrepreneurs. So, the provision of up-to-date training (and refresher courses) and equipment would help to

improve the quality of birth registration process in rural Bangladesh. Birth certificate validity checks along the lines conducted for this study can easily be replicated by schools, and can help identify unions with high rates of invalid certificates, and thus the UDCs that could benefit from such training and investments. Although the institutional set-up for birth registration differs across countries, this two-pronged strategy may also help improve birth registration rates and the reliability of birth registration records in other developing countries. In turn, digitisation of birth registration records (and allocating resources and training to ensure that the birth registration system is effective) can significantly improve state capacity to deliver a range of public services to citizens, similar to the effects of biometrically authenticated payment infrastructures obtained by Muralidharan, Niehaus, and Sukhtankar (2016).

#### **Acknowledgements**

Birth registration in Bangladesh

This chapter is based on research undertaken for a project titled 'Enduring more agency and community surveillance support to reduce child marriage in Bangladesh', conducted with the financial support of Grand Challenges Canada and the Government of Canada, through Global Affairs Canada (GAC) (Grant Number: R-ST-POC-1909-28916). We would like to thank MOMODa Foundation for their invaluable partnership and support in this project, the editors and reviewers for their feedback on earlier versions of the chapter, and to Aniema Atorudibo, Josephine Brett and H.M. Masudur Rahman for their excellent research assistance.

#### **Endnotes**

Supplementary material for this chapter is available on LSE Press's Zenodo site (https://zenodo.org/communities/decentralised\_governance/). See: *Supplementary material for*: Abu S. Shonchoy and Zaki Wahhaj (2023) 'Birth registration, child rights, and local governance in Bangladesh', in Jean-Paul Faguet and Sarmistha Pal (eds) *Decentralised Governance: Crafting Effective Democracies Around the World*, London: LSE Press. https://doi.org/10.5281 /zenodo.7920630

education. This pattern holds both for any birth certificate and for validated birth certificates.

#### **References**

Amin, Sajeda; Asadullah, Niaz; Hossain, Sara; and Wahhaj, Zaki (2019) 'Is the Law Enough to End Child Marriage?' Technical report, LSE International Development blog. https://blogs.lse.ac.uk/internationaldevelopment/2019/11/08/is-the-law

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*The Journal of Development Studies*, vol.51, no.7, pp.881–904. https://doi.org/10.1080/00220388.2015.1010156

Birth registration in Bangladesh

# **12. Administrative decentralisation and its impacts on educational expenditure and student outcomes: evidence from Colombia**

*Valentina Chegwin, Isabela Munevar, and Fabio Sánchez*

#### **Summary**

A substantial decentralisation reform occurred in Colombia school education in 2001. The government established an arbitrary rule that granted municipalities with a population greater than 100,000 almost complete autonomy to provide education services (certification). Going beyond some mechanisms identified in previous policy evaluations (such as a higher proportion of higher-quality teachers) we analysed how reform affected the investment of local resources in education and the distribution of the total budget in key areas of the school system. Certified municipalities experienced an increase in education expenditure, after discounting teachers' payroll, because of increased efficiency in the management of total resources, both locally raised and central government transfers. This allowed higher expenditures in school infrastructure, education quality, and other education-related programmes, all key components of education policy. In addition, after 2002 the competitiveness of public schools increased in certified municipalities, compared to non-certified areas. Achieving better student outcomes was primarily explained by changes in the allocation of resources in certified municipalities that resulted in increased efficiency after gaining autonomy. Lastly, certification enhances competitiveness of public schools as against private ones.

#### **How to cite this book chapter:**

Chegwin, Valentina; Munevar, Isabela and Sánchez, Fabio (2023) 'Administrative decentralisation and its impacts on educational expenditure and student outcomes: evidence from Colombia', in: Faguet, Jean-Paul and Pal, Sarmistha (eds) *Decentralised Governance: Crafting Effective Democracies Around the World*, London: LSE Press, pp. 335–369. https://doi.org/10.31389/lsepress.dlg.l License: CC BY 4.0

Since the 1980s Colombia has undergone a progressive process of administrative and political decentralisation that allowed the enactment of the election of mayors in 1986 and of governors in the early 1990s (Falleti 2005; Falleti 2010). As a consequence of the 1991 constitution, resources transferred from the central government to departments and municipalities began to grow rapidly in the early 1990s. But, later in the decade, the nation's fiscal situation became critical, which triggered a set of reforms in 2001 aimed at reducing the public deficit. Among them was a decentralisation reform that limited the growth of resources transferred from the central government to subnational governments and altered the distribution of transfers across municipalities. A set of municipalities became officially decentralised, which meant that they received higher transfers from the central government and greater responsibilities in the delivery of public services.

One of the core laws of the reform (Law 715/2001) shifted the management of public education to either municipalities or departments. Starting in 2002, municipalities with 100,000 or more inhabitants became 'certified in education', which conferred on them the responsibility for supervising, planning, and delivering public education in their territories. Their duties included managing central government transfers, teacher hiring and transfers, and other education-related programmes to improve both school student enrolment rates and education quality. Municipalities with fewer than 100,000 inhabitants were not certified, and their public education activities remained a departmental-level responsibility. Becoming certified meant transitioning from receiving and managing a lower amount of transfers, and being subject to departmental supervision, to having greater managerial and financial autonomy. By contrast, non-certified municipalities gave up their already-limited powers to their respective department (Bonet, Pérez, and Ayala 2014; Brutti 2020).

We first describe the educational decentralisation process in Colombia, including some background on the pre-reform scenario and the technical implications of the reform in the public delivery of education across municipalities in the country. We next expand the slim existing literature on the reform's impact (for example, Elacqua et al. (2021) and Pritchett (2014); see also the Annex to this chapter) by exploring some previously untapped channels that account for part of the improved student outcomes. Elacqua et al. (2021) found positive impacts of decentralisation on academic achievement and enrolment, but only explored a few of the underlying mechanisms such as improved teacher hiring and increased tax collection, which only account for a small part of the observed changes (see Annex, Table 12D). Our research builds upon their findings by identifying the ways in which decentralisation contributes to these improvements, specifically in relation to municipal educational spending. We also delve deeper into the effects on school enrolment by comparing the increase in public primary and secondary school enrolment to that of private schools, indicating a heightened competitiveness in the public education system.

Administrative decentralisation and its impacts 337

We find that, beyond improving student outcomes, allotting autonomy to local governments strengthened the competitiveness of the public school system vs private institutions. This study adds to the existing literature by filling in the gap in understanding how decentralisation leads to improved educational outcomes and contributes to the ongoing debate on the most effective ways to improve education delivery. Our results suggest that the mechanisms associated with these improvements primarily relate to efficiency gains in the management and allocation of resources in newly autonomous certified municipalities. Our results thus contribute to the existing literature by addressing the gap in understanding the relationship between decentralisation and improved educational outcomes, thus adding to the ongoing discourse on the most effective methods to improve education.

#### **12.1 Decentralisation in Colombia**

In the mid-1980s, Colombia initiated a process of gradual decentralisation that started with political decentralisation in 1986 with the election of mayors of the 1,121 municipalities and continued in 1991 with the election of the governors of the country's 32 departments (each spanning many municipalities) by popular vote. Prior to these changes, mayors were appointed by governors and the governors by the president (Cortés 2010). In 1993, with the enactment of Law 60, the process of administrative decentralisation deepened and both municipalities and departments assumed greater responsibilities in the delivery of education, health, and potable water and sewage (Faguet and Sanchez 2009; Faguet and Sanchez 2014). This reform was accompanied by a significant increase in central government transfers to departments (known as the Situado Fiscal) and municipalities (the Municipal Share). Law 60 specified that municipalities were to oversee the management of preschool, primary, and secondary education services. In addition, municipalities should allocate resources to finance school construction and education programmes and projects and oversee and evaluate the delivery of educational services. The responsibilities of departments included the same roles as the municipalities, which entailed a great deal of coordination between the two levels of government. In addition, departments were also put in charge of the hiring, training, and ranking of teachers, as well as their assignment across municipalities. Teacher payrolls were to be paid by departments, financed with central government transfers to them (Bonet, Pérez, and Ayala 2014; Borjas and Acosta 2000).

The absence of a clear delineation of the responsibilities of each level of government generated an overlapping of functions that blurred lines of accountability. For example, prior to the 2001 reform, teachers were in fact paid by both departments and municipalities. Estimates by Borjas and Acosta (2000) indicated that the department payrolls covered 85−90 per cent of all public school teachers. Municipalities hired and paid the remaining 10−15 per cent, and in addition assigned teachers across schools within their jurisdiction. In many cases the entities put in charge of certain educational services did not have enough resources and legal authority to fulfil their responsibilities. For example, municipalities had a key role in the management of public schools, but they had very limited authority to appoint or dismiss staff (Borjas and Acosta 2000). In practice, during the 1990s and until 2002, departments performed the chief role in the administrative decentralisation of education. They also received a higher percentage of the central government transfers earmarked for education.

#### The 2001 Decentralisation Reform of Education

However, by the late 1990s, the structure of administrative decentralisation and central government transfers associated with it had become fiscally unsustainable, given its increasing cost. The Colombian economic and fiscal crisis of 1999 sparked a reform of the system of central government transfers to subnational entities. However, the reform required a set of constitutional and legal changes and involved a great deal of political and technical discussions. Law 715 was enacted in 2001, and since then, with some modifications, it has been the main regulatory framework of Colombia's administrative decentralisation. The reform limited the annual growth of central government transfers and tried to fix the shortcomings of Law 60 regulations, mainly by simplifying the overlapping responsibilities between departments and municipalities (Bonet, Perez, and Ayala 2014; Brutti 2020).

Under Law 715, administrative decentralisation and the supervision, planning, and delivery of education began to be managed by certified territorial entities (Entidades Territoriales Certificadas – ETCs), which could be either departments (at regional level) or municipalities (at local level). The departments managed most of the supervision, planning, and delivery roles for the non-certified municipalities within their jurisdiction. The law established that certification would be granted to all municipalities with more than 100,000 inhabitants at the end of 2002, of which there were 46. In addition, after 2003, municipalities not initially certified in 2002 were allowed to become so if an evaluation by their supervising regional department found that they had the technical, administrative, and financial capacity to manage the provision of education despite having fewer than 100,000 inhabitants (Ministerio de Educación Nacional 2005). Seventeen more municipalities became certified through this process.

As for teachers, Law 715 established that certified entities had the legal authority to hire principals and teachers, although owing to resource constraints the Ministry of Education imposed restrictions on the number that could be hired. These limits were implemented to avoid the disorderly increase in teacher payrolls characteristic of the 1990s (Congreso de Colombia 2000; Duarte 2001). Before 2002, the hiring of teachers and principals by the departments occurred after a determination of eligibility based on the credentials of the applicants (degrees, experience) and interviews. Administrative decentralisation and its impacts 339

Once teachers were deemed eligible, the educational authority assigned the new teachers to the department's schools based on the number of available vacancies (Brutti and Sanchez 2022; Ome 2013). This credential-based system was replaced in 2002 by an exam-based system under which the candidate applied to become a teacher in a specific certified entity. Candidates were required to pass the subject exam with a minimum score (60/100) and, once that requirement was met, the candidate would take a psychometric test, meet credential requirements, and be interviewed. Eligible new teachers then chose schools among the available vacancies. Certified entities placed applicants into vacancies based on the rankings of eligible teachers.

Once staff were in the system, the educational authority of each certified entity had the legal authority to reassign teachers within the entity. Departments assigned teachers across multiple non-certified municipalities in their area, according to the teachers' ranking and preference across these jurisdictions. More advantaged and high-performing schools were often chosen first by the highest-scoring teachers, so the low-performing teachers were often assigned to underachieving, isolated, and disadvantaged schools. Certified entities could also hire temporary teachers if they deemed it necessary. A high percentage of these teachers either did not undergo the eligibility process or did not pass the mandatory exams.

Certified entities tended to have no restrictions either on the use of their diverse sources of funding (for example, their own local taxes, debt, or dividends from public companies) or on how they distributed resources to programmes or interventions aimed at improving educational outcomes. Likewise, non-certified municipalities could add their own resources for the educational inputs they considered important. Such inputs could cover (i) furniture, texts, libraries, didactic, and audiovisual materials; (ii) improvement of school management; (iii) construction, maintenance, and adaptation of infrastructure; (iv) public services and operation; (v) improvement of working conditions of teachers; and (vi) non-teaching staff. Certified entities could attract teachers to schools in their jurisdiction by improving working conditions and giving incentives to high-performing candidates. These municipalities could also allocate resources for school transportation and school meal programmes (Ministerio de Educación Nacional 2002).

#### The structure of the central government transfers for education

Between 1993 and 2022 the distribution of transfers to subnational entities in Colombia operated under two legal and regulatory frameworks. Under Law 60 of 1993, 60 per cent of total transfers to departments (Situado Fiscal) had to be allocated to education and 20 per cent to health. In addition, 30 per cent of central government transfers to all municipalities (Participación Municipal) were earmarked for education and the rest to other social services and local running costs. The distribution of transfers across municipalities depended upon population, poverty rates, and many other variables.

Under Law 715 in 2001, coming after the economic and fiscal crisis of the late 1990s, central government transfers – known as the General System of Revenue Sharing (Sistema General de Participaciones) – were set to finance the provision of social services in general, and public education in particular, according to the responsibilities assigned under decentralisation. The structure of central government transfers to subnational entities expressed in Law 60 was radically changed. Law 715 introduced a new set of rules to distribute monies paid under the General System of Revenue Sharing (SGP). The total amount of transfers would grow at a fixed annual rate of 2 per cent and fund the provision of education, health, and water and sanitation services. Up to 2022, the legislation stated that 58.5 per cent of the SGP total must be allocated to education, and 90 per cent of that 58.5 per cent (or just under 53 per cent of the total) was to be distributed across 'certified' entities depending on the total number of students and their regional costs, as well as on national objectives for enrolment growth. These funds covered personnel costs (teachers and administrative staff) and could also be used to contract private schools when places for students in public schools were in short supply. The remaining 10 per cent of central government transfers for education were distributed across municipalities and allocated to quality improvement (for example, school transportation, school meals, utilities, minor school construction, school computers, and teacher training) (Alvarez et al. 2018).

Figure 12.1 presents the evolution of per capita central government transfers to departments and municipalities using the Law 715 classification of 'certified' and 'not-certified' entities for the period 1994–2015. It is immediately apparent how profoundly the 2001 reform altered the distribution of central government transfers (Figure 12.1a). In the 1996–2002 period, the large municipalities (certified in 2002) received the same per capita transfers for education as those that would become non-certified. However, in 2003 per capita transfers for non-certified municipalities abruptly declined, while transfers for certified municipalities and departments sharply increased (Figure 12.1b).

Still, despite the fall in transfers from the central government to non-certified municipalities, overall transfers and transfers for education spending were much higher for non-certified municipalities, as they depended on their transfers from the central government in addition to the departments' transfers. This change entailed that certified municipalities did acquire more independence in the administration of their resources, but that the change did not mean an increase in total transfers received beyond the resources available for non-certified municipalities. This detail is crucial when thinking about the impacts of decentralisation because any effects caused by the 2021 reform can be interpreted as an effect of gained autonomy at the local level, and not as a consequence of an increase in the absolute value of the transfers received.

To help readers' appreciation of these differences between certified and non-certified municipalities, the Annex to this chapter (especially Tables 12A, 12B, and 12C and their accompanying text) give additional background inforAdministrative decentralisation and its impacts 341

a. Total central government transfers per capita

#### b. Transfers for education per capita

Source: National Planning Department. Author's calculations. Note: Per capita educational transfers in thousands of Colombian 2018 pesos.

mation on the differences between the two authorities in terms of their social characteristics, their inputs into education and their school students' performance on various test scores.

The second part of the Annex also looks at previous work in this field, describing the findings of Elacqua et al. (2021), who evaluated the impact of administrative decentralisation on educational outcomes, including student enrolment and student achievement, and on the contractual and educational characteristics of teachers. Their results suggest that the decentralisation process in Colombia substantially altered the way in which local governments assigned and executed their resources. While certified municipalities had the mandate to plan, manage, and deliver the provision of education and seem to have successfully improved enrolment, quality, and equity in their school systems, departments had a similar mandate (and received higher per capita transfers from the central government to deliver education in the non-certified municipalities), but showed lower educational outcomes. The reform had positive and significant effects on enrolment and student performance and Elacqua et al. (2021) attributed these effects to a greater percentage of teachers with higher education and improved fiscal efforts in certified territories.

#### **Figure 12.2: Total transfers (from both central government and departments) to municipalities before and after the administrative decentralisation reform**

a. Total transfers from both central government and departments per capita

Source: Elacqua, Munevar, Sanchez, and Santos (2021).

Note: Per capita transfers in thousands of Colombian pesos as at 2018. (For this figure, 500,000 COP = US\$105 US approximately per capita; and COP 1,000,000 = US\$208 approx, per capita.) Until 2002 all municipalities received central governments' transfers both directly and indirectly through departmental spending. Since 2003, certified municipalities have received only direct transfers from the central government, while non-certified municipalities receive central government transfers both directly and indirectly through departmental spending.

(*Continued*)

Administrative decentralisation and its impacts 343

#### **Figure 12.2: Continued**

b. Transfers for education from both central government and departments (in thousands of Colombian pesos)

It seems plausible to assume that by creating greater municipal autonomy certification prompted significant efficiency gains, by lowering transaction costs due to more and better information, more transparent negotiation processes, and rapid adjustment to correct errors (Pritchett 2014; Pritchett and Pande 2006). Local governments in certified municipalities might have gained the power to use their resources in a way that served the needs of their particular populations, while the freedom to better tailor their budgets might have enhanced the efficiency of the resources spent. Improved teacher hiring seems likely to be only part of the story, and other pieces of the puzzle (both mechanisms and longer-term outcomes) may explain the superior path observed in certified municipalities years after the reform's implementation of the reform.

#### **12.2 Analysing the efficiency effects of decentralisation on outcomes**

We next focus on breaking down the 'efficiency' hypothesis – namely, the proposition that part of the effects of the reform came from a 'better' or more efficient use of both central government transfers and own local resources in

Note: Per capita educational transfers in thousands of Colombian 2018 pesos. Until 2002 all municipalities received central governments' transfers for education both directly and indirectly through departmental spending in education. Since 2003 certified municipalities have received only direct transfers for education from the central government, while non-certified municipalities receive central government transfers for education both directly and indirectly through departmental spending in education.

#### **Figure 12.3: How the ramifications of certification operated after the 2001 decentralisation reform – outcomes and mechanisms**

Source: Authors' creation.

certified municipalities. More specifically, we explored the effect of the reform on (i) the amount of local resources that certified municipalities spent on education, and (ii) the way local governments assigned and spent their resources. We found that while these municipalities were able to spend more in important educational programmes, they did not require additional fiscal efforts to do so. We then analysed the mediating effect of increased efficiency and improved allocation of resources on student outcomes, and we discuss below how all these existing channels translated into a stronger public school system.

We propose that being certified (understood as the ability to assign and manage education resources autonomously) produced efficiency gains because decision makers gained more access to information about local educational needs and a stronger capacity to allocate resources effectively (see Figure 12.3). Additionally, this gained autonomy might have allowed certified entities to redistribute and invest their available resources (both locally raised and central government transfers) across key areas of the education system in a way that increased the productivity of the resources spent and more accurately served the needs of their municipalities. We also hypothesise that both an improved education system and the more efficient use of resources triggered more permanent, or structural, transformations in the way that local communities related to their public school system, promoting parental demand and higher student enrolment in local public schools.

To evaluate the effects and mechanisms of the decentralisation reform, we used four different sources of data: (i) the population census of 1993 which forecasted 2001 municipal population sizes, used to determine which municipalities became certified; (ii) a panel database, constructed by the Center of Economic Studies of Los Andes University, that contains data from different public sources and contains diverse geographic, demographic, and Administrative decentralisation and its impacts 345

socio-economic characteristics for the 1,121 Colombian municipalities; (iii) the Territorial Administrative Report – Formato Unico Territorial (FUT) – which contains detailed reported annual expenditures in each municipality, including itemised expenditures in education; and (iv) a database from the National Bureau of Statistics (Departamento Administrativo Nacional de Estadística, DANE), with information on the numbers of students by level of education (preschool, primary, and secondary) in all Colombian public and private schools since 1996.

To evaluate the effects of the decentralisation reform, we exploited the quasi-experimental treatment of the 'certified' municipalities using a variant of differences-in-differences (DD) models that controlled for municipality and year fixed effects, and for department-year interactions, to account for any educational policies and interventions in non-certified municipalities that could be carried out by the departmental authorities. Because certification in 2002 was arbitrarily assigned based on a population size cut-off, municipalities could not 'choose' to be certified. Given the impossibility of self-selection, as well as the existence of parallel trends in the pre-reform period (which can be observed in Figures 12.8 and our Annex Figures 12.A and 12.B), we justify the use of a DD model to estimate the effects of the reform on our outcomes.

The difference-in-differences model we estimated was the following:

$$Y\_{m,t} = \beta\_m M\_m + \beta\_t T\_t + \beta\_3 \\ \text{Certified}\_m\* \text{ post2002}\_t + \beta\_{dt} \\ \text{Department} \\ \text{Year} + u\_{mt} \quad [1]$$

where *Ym,t* represents the outcomes of study – local and itemised expenditures in education and share of public vs private student enrolment. Our key explanatory variable is the interaction between the two *Certifiedm* \* *post*2003*<sup>t</sup>* . *Certified* is a dummy that takes a value 1 when a municipality was certified after 2003; Post2002 is a dummy that takes a value 1 in the years after 2002; it is zero for pre-2002 years. We also include *Mm* to account for the time-invariant municipal fixed effects, year fixed effects *Tt* and department-level time-varying unobserved factors Department × Year; the latter control for any annual shocks and educational departmental policies that may affect educational spending at a local level. *Ceteris paribus*, our coefficient of interest is *β3* , which captures the effect of a municipality being certified after 2002 on *Ym,t*  compared to those not being certified. Note, however, that the control group of non-certified municipalities did not remain unchanged after 2002; these became centralised after 2002. As such, it is difficult for us to capture the pure effect of decentralisation. We can thus estimate only the differential effects of becoming decentralised in education compared to being centralised after 2002. The estimated treatment effects as captured by *Certifiedm* \* *post*2002*<sup>t</sup>* can still be biased because of the unobserved municipality-level time-varying characteristics, for example whether it is allied with the departmental government or not, that determines that a municipality may receive additional direct investments from it; as such we need to be cautious about interpreting these estimates.

We also test the robustness of Equation [1] using the standard difference-in-difference equation specification as follows:

$$\begin{split} Y\_{m,t} &= \beta\_1 \text{Certiffed}\_m + \beta\_2 \text{post2002}\_t + \beta\_3 \text{Certiffed}\_m \ast \text{post2002}\_t \\ &+ \beta\_m M\_m + \beta\_{\text{dt}} \text{DepartmentxYear} + u\_{m,t} \end{split} \tag{2}$$

#### How more autonomy in public education affected subnational education expenditures

We theorise that certified municipalities gained the autonomy to prioritise and assign education resources in a way that better responded to the needs of the communities they serve, while non-certified municipalities remained subject to the decisions and mandates of their government at the department level. Previous literature has identified an increase in local taxes post-reform, yet we argue that an increase in per capita local taxes does not necessarily translate into higher local resources spent on education. More autonomous management of education-related resources could promote education goals within local governments policy agenda without necessarily requiring additional fiscal efforts for education, if resources are efficiently used. With equal or even reduced resources, certified municipalities might be able to attain equal or better results, generating increased productivity per peso spent. So, testing for efficiency gains consists of exploring whether local governments assigned their locally raised resources to education-related expenses before and after the reform.

To explore whether the reform affected the total amount of local resources spent in education, and the way municipalities assigned resources across the different components of education policy, we first analysed the percentage of local resources assigned to education, and then we looked at trends in expenditure by item across certified and non-certified municipalities. The information on total and itemised expenditures was obtained from the FUTs, annual administrative reports giving disaggregated information on which services municipalities spend their resources on. For this exercise, we homogenised all education-related expenses by municipality, since 1994. By creating this standardised panel, we were able to do year-to-year and expenditures comparisons across municipalities. To our knowledge, we are the first study to clean and standardise this administrative data in a way that allows across time and territorial analysis. To study changes in particular expenses before and after the reform, between certified and non-certified municipalities we looked at: (i) per capita spending in school infrastructure; (ii) per capita spending in teacher salaries; (iii) per capita spending in education quality; and (iv) per capita spending in other education programmes. School infrastructure, teacher quality, investments aimed at improving education quality, and other education-related programmes are all key components of education policy and have been linked to improved school performance and educational Administrative decentralisation and its impacts 347

outcomes (Belmonte et al. 2020; Cuesta, Glewwe, and Krause 2016; Goldhaber and Brewer 1996; Wang and Fawzi 2020).

To explore differences in the management of total resources spent across municipalities, we looked at the total expenditure in key education items and the distribution across these categories. Specifically, we grouped reported school expenditures into three main categories: infrastructure investments, investments in other education-related programmes, and investments to improve education quality. These are summarised in Table 12.1.

One of the corollaries of Law 715 was that certified municipalities would receive greater transfers, mainly designated to hiring teachers and managing their school assignments. Complemented by the municipalities' own resources, these transfers raised the total resources for education in certified municipalities. And after 2002, local governments could manage these resources freely, as long as they complied with the teacher requirements of their respective school systems. Figure 12.4a shows how the expenditure on teacher salaries increased in certified municipalities but decreased in non-certified areas as this responsibility was transferred to departmental governments. Clearly, certified municipalities managed significantly more resources after the reform than non-certified municipalities did. But, since resources were primarily destined for teacher salaries, it did not necessarily imply higher per capita education expenditure in these municipalities. Elacqua et al. (2021) inferred that higher transfers could boost fiscal efforts in decentralised territories to increase the share of local resources allocated to education. Contrary to their beliefs, we test for increases in locally raised resources allocated to education and argue that, instead of a boost in available additional resources, autonomy gained by certified municipalities allowed them to assign their resources in a more efficient manner. The latter would translate bigger gains by per capita peso spent, without the need to assign more local resources to education policy. This is explained below.

Figure 12.4b shows the assignment of locally collected resources to education in both certified and non-certified municipalities. After 2002, the total amount of per capita local resources spent on education at first fell sharply in certified municipalities, but almost immediately increased again. It then fluctuated but remained somewhat below the resources spent in non-certified municipalities in the years that followed. This could not be attributed to increased fiscal efforts for education in certified municipalities. Instead, the performance of the education system was highly dependent on the way the certified municipalities managed the central government transfers and the assignment of all resources to the different items of their education agendas.

#### **Figure 12.4: Distribution of per capita expenditures in certified and noncertified municipalities, in thousands of Colombian pesos**

a. Per capita expenditures on teachers' salaries

(*Continued*)

Administrative decentralisation and its impacts 349

b. Per capita education expenditure from local resources

Source: Authors' calculation. FUT database from the Colombian National Planning Department (1997−2015).

Note: Panel a shows per capita transfers for teacher salaries in thousands of Colombian 2018 pesos.

Panel b depicts average municipal per capita expenditure with local resources (that is, total expenditure minus transfers from the central government). Municipal education expenditure was reported in thousands by the municipalities and was then divided by the municipal population and transformed to 2018 Colombian pesos. Data from 2010 was not included due to missing information.

Figure 12.5 shows that before 2003 non-certified municipalities (serving smaller populations than certified authorities) spent substantially more per capita resources in school infrastructure, education-related programmes, and education quality investments. After 2003, the gaps in all three of these expenditures were significantly reduced given the growth in certified municipalities' spending, especially in infrastructure and other programmes.

The expansion of total resources in certified municipalities cannot be attributed to the expansion of *locally raised* resources for education, since Figure 12.4b shows that certified municipalities spent less than non-certified municipalities. The central government transfers that the certified entities received after 2002 responded to projected teacher costs in those territories. If these municipalities became more efficient in hiring and assigning teachers, then they freed up resources for other types of educational spending. By contrast, efficiencies in the use of teacher salaries were not possible for non-certified municipalities because they lacked financial autonomy.

#### **Figure 12.5: Trends in per capita education-related expenses in certified and non-certified municipalities, in thousands of Colombian pesos**

#### a. School infrastructure

(*Continued*)

Administrative decentralisation and its impacts 351

#### **Figure 12.5: Continued**

Source: FUT database from the Colombian National Planning Department (1997−2015). Note: Expenditure in the different education components was reported in thousands by the municipalities and then divided by the municipal population and transformed to 2018 Colombian pesos. Data from 2010 was not included due to missing information.

Hence, if non-certified municipalities wished to expand spending in educational programmes, they needed to make a greater fiscal effort than certified municipalities.

For both types of municipality, Figure 12.6 shows the total per capita expenditure in education after subtracting teacher salaries. Consistent with our hypothesis, we observed an increase in total resources available in certified municipalities that cannot be explained by an expansion in local resources. In non-certified municipalities, the resources maintained the trend observed before the reform, while the growth in certified municipalities suggests that the lower teachers' payroll per capita allowed for some resources to be allocated to other education expenditures. Put together, the trends in itemised expenditures and total expenditures after teacher salaries suggest that the reform did promote changes in the way certified municipalities assigned their education resources.

Since our preliminary analysis pointed towards efficiency gains arising from increased autonomy after certification, we further tested our hypothesis using a difference-in-difference model as per Equation [1]. All per capita outcome variables had a logarithmic transformation for ease of interpretation. Table 12.2 shows the coefficient estimate of Certified×Post2002 as per Equation [1].

**Figure 12.6: Per capita total expenditure in education net of teacher salaries, in thousands of Colombian pesos**

Source: Authors' creation. FUT database from the Colombian National Planning Department. 1997−2015.

Note: This figure depicts the total average municipal per capita expenditure after subtracting teachers' salaries. Municipal education expenditure was reported in thousands by the municipalities and was then divided by the municipal population and deflated to 2018 Colombian pesos. Data from 2010 was not included due to missing information.

The estimated coefficients of the key interaction term Certified×Post2002 in Table 12.2 show that the proportion of own resources spent in education as well as per capita expenditure with own resources fell in newly autonomous certified municipalities after 2002 relative to newly centralised non-certified municipalities. In contrast, per capita expenditure net of teacher salaries, increased for school infrastructure, education quality, and other programmes in certified (relative to non-certified) municipalities after 2002, indicating a reallocation of total expenditure into productive education items that help boosting student performance. We get similar results using the alternative specification Equation [2] as summarised in the Annex, Tables 12E and 12F. Taken together, certified municipalities were able to reallocate resources from teacher payroll to other educational expenses according to student needs, in this case for school infrastructure, and other quality expenses, after gaining autonomy after 2002. That budget flexibility is not possible for centralised non-certified municipalities that do not have the autonomy to assign their educational resources. Quality and infrastructure investments are likely to respond, and be tailored to, the specific needs of the schools and their members, and have been found to boost educational outcomes and enrolment Administrative decentralisation and its impacts 353

#### **Table 12.2: Average effects of certification in education on measures of municipal education expenditure**

Source: Colombian National Planning Department. Authors' calculations. Note: The table shows the estimated coefficient of certified×Post2002 using difference-indifference Equation [1]. In all models the number of years = 18; the number of municipalities = 1070; and fixed effects are included for Year; Municipality; and Department × Year. Robust standard errors in italics and parentheses. \*\*\*p < 0.01, \*\*p < 0.05, \*p < 0.1.

by improving learning conditions (Belmonte et al. 2020; Cuesta, Glewwe, and Krause 2016).

In the Annex to this chapter, Figures 12.A and 12.B show the estimated coefficients of year–certification interactions to our estimations: per capita education expenditure from locally raised resources, per capita total education expenditure net of teacher salary, and per capita education expenditure on key accounts, respectively. Since the resource allocation scheme was the same for all municipalities before the reform, we should not observe significant differences in these expenditure items between certified and non-certified municipalities prior to 2003. The pre-reform coefficients in both sets of figures confirm no significant pre-existing differences in various per capita education expenditure items between non-certified and certified municipalities, which in turn validate the existence of parallel trends before the enactments of the reform. This is essential for the consistency of the difference-in-difference estimates shown in Table 12.2.

Furthermore, these figures show the long-term effects of the 2002 reform. Although the effect of per capita expenditure remained close to zero in the years following the reform, per capita education expenditure after deducting teacher salaries remained positive and significant for at least a decade after the certified municipalities gained financial autonomy over the management of their resources. In addition to the higher expenditures in key items of municipal education policy shown in Table 12.1, Figure 12.B shows that these indicators remained above the pre-reform levels in certified municipalities way past 2003.

#### Decentralisation and enrolment in public and private schools

Investments in school infrastructure, and resources destined to education-related programmes and education quality, have all been associated with improved student outcomes (Hong and Zimmer 2016; Wall et al. 2022). So, increases in these investments boost factors that the previous literature has associated with positive effects on student performance and enrolment. Accordingly, we hypothesised that more structural, or long-term gains would be likely to occur as an improved public school system eventually attracted parents who before would have opted to enrol their children in private school. If so, then the enrolment composition of the public and private school systems should change in certified municipalities.

To assess the effects of the decentralisation process on the composition of public vs private student enrolment, we used data from the C-600 database of the National Bureau of Statistics, which contains information on the number of students by level of education (preschool, primary, and secondary) in all Colombian schools, by year, both private and public. We calculated a twoway fixed effect model leveraging on the variation in the proportion of enrolment in public schools as a percentage of total enrolment, before and after the 2001 reform and between certified and non-certified municipalities.

Figure 12.7 shows percentage shares of public enrolment in total enrolment, in certified and non-certified municipalities, before and after the decentralisation reform. The proportion of public enrolment in certified municipalities was increasing before 2001, although rates were significantly below the rates of non-certified municipalities for both primary and secondary schools. After 2002, the growth of public enrolment in certified municipalities started accelerating, reducing the gap with non-certified municipalities. Public enrolment at the primary stage increased sharply in certified municipalities after 2002, but then fell away again compared to non-certified areas, reopening a large gap in Figure 12.7a. However, at the secondary stage Figure 12.7b shows that the immediate post-reform improvement in the share of public schools in certified municipalities was sustained in subsequent years.

Table 12.3 shows the coefficients of a difference-in-difference model that regresses municipal certification on primary and secondary public enrolment rates using Equation [1]. Each estimated coefficient is positive and statistically significant, indicating that certified (relative to non-certified) municipalities experienced significantly higher share of public enrolment after 2002. We obtain similar estimates when using Equation [2] as summarised in Annex Table 12G. Figure 12.8 further shows that certification had a positive effect on annual public enrolment in primary schools (panel a) and also a positive Administrative decentralisation and its impacts 355

#### **Figure 12.7: Trends in the proportion public enrolment, as a proportion of total enrolment, in certified and non-certified municipalities**

#### a. Primary enrolment

#### b. Secondary enrolment

Source: The National Administrative Department of Statistics. Authors' calculations. Note: This depicts the average percentage enrolment in primary and secondary school, of the total municipality enrolment from 1997 to 2015. Information from 2007 was omitted due to misreporting.

effect on public secondary enrolment (panel b), compared to non-certified municipalities, lending support to our view of the increased competitiveness of public schools.

Did increased expenditure (from increased efficiency in the use and allocation of resources) mediate the effect of certification on student performance and share of public enrolment? Table 12.4 shows the results of a regression of six different per capita municipal expenditure measures on high-school exit exam test scores and municipal enrolment rates, controlling for year, municipal, and departmental fixed effects. The exercise aimed to investigate whether the differential way in which certified municipalities spent their resources did

**Table 12.3: Average effects of certification in education on proportion of public enrolment**

#### **Figure 12.8: The effect of certification on the proportion of public primary and secondary enrolment**

#### a. Primary enrolment

Administrative decentralisation and its impacts 357

b. Secondary enrolment

Source: The National Administrative Department of Statistics. Authors' calculations. Note: These graphs show the estimated coefficients of a difference-in-difference estimation that regresses the public education participation of total enrolment on municipal certification for each year from 1997 to 2015. Dots represent estimated coefficients and the lines their corresponding confidence intervals. Municipal investment had a logarithmic transformation for the ease of interpretation.

explain part of the improvements in student academic performance and public enrolment rates in certified municipalities.

We found that per capita measures of total expenditure net of teachers' salaries, plus infrastructure and quality expenditure were strongly correlated with both student performance and enrolment rates. An increase in total per capita expenditure in other education programmes did not show any significant impact on academic performance but it did affect enrolment rates in both primary and secondary schools. The results in Table 12.4 serve as evidence to validate the view that flexibilities in expenditure decisions and efficiencies in the use of resources in certified municipalities have been strong drivers of the improvements in local education systems in certified municipalities compared to non-certified municipalities after 2002.

#### **Conclusions**

Our study capitalised on the major educational decentralisation reform that occurred in Colombia in 2001, where the government established an arbitrary rule that granted municipalities with a population greater than 100,000

#### **Table 12.4: Associations between local expenditures, student outcomes, and public enrolment rates**

Source: Authors' calculations. Colombian National Planning Department, the National Administrative Department of Statistics.

Note: This table regresses high-school exit exam test scores and municipal enrolment rates on six different per capita municipal expenditure measures controlling for year, municipal and departmental fixed effects. Robust standard errors are shown in italics and parentheses. \*\*\*p < 0.01, \*\*p < 0.05, \*p < 0.1.

In all models: the number of years = 18; and fixed effects were applied for Year, Municipality, and Department × Year.

almost complete autonomy to provide education services (certification). Our four main findings are:

• Certified municipalities experienced efficiency gains that increased the productivity of educational expenditures. Why? We observe that after the reform:

Administrative decentralisation and its impacts 359

Our results suggest that the higher education expenditures did not come from increased fiscal efforts allotted to education but from efficiency gains enjoyed by certified municipalities in their use of available resources after gaining autonomy. As such, our work goes beyond Elacqua et al. (2021) and provides evidence on the mechanisms through which decentralisation improves educational outcomes, specifically through increased efficiency and better allocation of resources.

#### **Annex: Background information on the characteristics and behaviours of certified and non-certified municipalities**

We first outline some key differences between certified and non-certified areas and their schools systems, and then briefly consider previous work on the educational decentralisation reforms.

#### Social characteristics and school education inputs and performance

Given the fixed size rule of 100,000 people applied in 2002 for municipalities to become certified, they were on average larger than non-certified areas. Consistent with this size difference, Table 12A shows that certified municipalities were also on average more developed, as measured by the Municipality Development Index. They had lower levels of poverty, as measured by the Unsatisfied Basic Need Index. And on average certified municipalities were less unequal, as measured by the municipal Land GINI.

Table 12B shows some pre-reform differences on local education expenditures, broken down by development/poverty indicators between the two types of municipalities. Overall, non-certified municipalities sustained higher per capita investments in infrastructure, education quality, and other education programmes, compared to those municipalities that would become certified. Additionally, the share of enrolled students in public versus private schools was higher in non-certified municipalities.

#### **Table 12A: Pre-reform development, poverty, and inequality in certified and non-certified municipalities, 2001**

Source: National Planning Department, CEDE municipal PANEL, and the National Administrative Department of Statistics (DANE). Authors' calculations.

Notes: The first two columns report 2001 mean of each variable for certified and non-certified municipalities.

The last column reports the estimated difference for each variable between certified and non-certified municipalities that results from an OLS regression that controls for the 2001 municipal population. Robust standard errors in italics and parentheses. \*\*\*p < 0.01, \*\*p < 0.05, \*p < 0.1.

#### **Table 12B: Pre-reform local expenditures in education and public versus private school enrolment in certified and non-certified municipalities, 2001**

Source: as per Table 12A.

Note: The first two columns report 2001 mean of each variable for certified and non-certified municipalities. The last column reports the estimated difference for each variable between certified and non-certified municipalities that results from an OLS regression that controls for the 2001 municipal population. Robust standard errors in italics and parentheses. \*\*\* p<0.01, \*\*p < 0.05, \*p < 0.1.

Regarding student outcomes, Table 12C shows that in 2001 students in municipalities that would become certified performed better than did students in non-certified municipalities, as measured by the SABER 11 standardised test (the Saber test is further described below). While in non-certified municipalities the enrolment rates in public primary schools were above that of certified municipalities, the rate of enrolment in public secondary schools was Administrative decentralisation and its impacts 361

#### **Table 12C: Pre-reform student performance, enrolment, rural–urban ratios, and student–teacher ratios in certified and non-certified municipalities, 2001**

Sources: as per Table A.1.

Note: The first two columns report the 2001 mean of each variable for certified and non-certified municipalities. The last column reports the estimated difference for each variable between certified and non-certified municipalities that results from an OLS regression that controls for the 2001 municipal population. Robust standard errors in parentheses. \*\*\*p < 0.01, \*\*p < 0.05, \*p < 0.1.

higher in the certified areas. Lastly, the ratio of rural to urban students was higher in non-certified municipalities, while the student–teacher ratio was higher in certified municipalities.

#### Previous work on how Colombia's reform changed education outcomes

What were the effects of the 2001 decentralisation reform on student and education system outcomes? And what mechanisms lie behind these effects? Colombia's 2001 decentralisation reform provides a unique research opportunity because it arbitrarily granted almost total administrative autonomy to one set of municipalities while almost totally reducing the autonomy of other municipalities, with no changes in political or fiscal decentralisation. This 'natural experiment' allowed the study of whether administrative decentralisation at the municipal level on local outcomes could translate into higher efficiency and performance in a quasi-experimental setting.

Elacqua et al. (2021) evaluated the impact of administrative decentralisation on educational outcomes, including student enrolment and student achievement, and on the contractual and educational characteristics of teachers. The 2001 reform affected the management of public education, including the appointment and allocation of teachers across schools, handling of programmes to reduce dropout rates and increase enrolment, distribution of financial resources to local schools, and evaluation of principals, among other tasks. It also affected the distribution of the central government transfers between municipalities and departments related to the delivery of public education but did not alter decentralisation in fiscal or political matters. Central government transfers for education were equal per capita in Colombian pesos for the municipalities that would be certified in 2001 and those that would not (see Figures 12.1 and 12.2 above). After 2002, certified municipalities gained more autonomy and received larger per capita transfers; non-certified municipalities lost autonomy and received smaller per capita transfers; and departments acquired stronger administrative powers over non-certified municipalities. This also meant that non-certified municipalities got larger per capita transfers than certified municipalities after adding direct transfers and indirect transfers received through departmental expenditure on the non-certified municipalities. This particular set-up provides an opportunity to evaluate the casual effects of administrative decentralisation in the territories that gained autonomy.

Elacqua et al. (2021) evaluated the effect of the 2001 decentralisation reform on the educational outcomes over which 'certified' municipalities had the autonomy to focus their efforts: student enrolment, teacher quality, and student achievement. Their difference-in-differences and regression discontinuity results showed that municipalities that became autonomous

#### **Table 12D: Summary of the effects of municipal administrative decentralisation on education indicators and local taxes**

Note: Coefficients in column 3 were all estimated using a DD method.

Source: Elacqua et al. (2021).

Administrative decentralisation and its impacts 363

in the delivery of public education after 2001 increased student enrolment, recruited a higher proportion of teachers with higher levels of education, and had students with higher achievement scores on standardised tests. Table 12D gives a summary of their main results.

Using a mediation analysis, Elacqua et al. (2021) found that a significant part of their findings (about 30 per cent of student performance) was explained by higher-quality teachers being hired in the newly decentralised municipalities. They also concluded that local taxes explained about 7 per cent of the difference in student performance and about 15 per cent of the boost they observed in student enrolment there. Still, the results also showed that these researchers' proposed mechanisms only explained a part of the improvements in education outcomes in certified municipalities, and that unknown channels accounted for 65 to 90 per cent of these effects.

Robustness check: Results from estimating Equation [2]

#### **Table 12E**

#### **Table 12F**

#### **Table 12G**

#### **Figure 12.A: Yearly effects of certification on per capita education expenditure from locally raised resources and total per capita education expenditure (net of teacher salaries)**

a. Per capita expenditure in education from locally raised resources

b. Per capita total expenditure in education deducting teacher salaries

Source: Authors' calculations. Colombian National Planning Department. Note: These graphs show the estimated coefficients of a difference-in-difference estimation that regresses the municipal per capita investment in each item on municipal certification for each year from 1997 to 2015. Dots represent estimated coefficients and the lines their corresponding confidence intervals. Municipal investment had a logarithmic transformation for the ease of interpretation.

Administrative decentralisation and its impacts 365

#### **Figure 12.B: The yearly effects of certification on per capita education expenditure on key accounts**

#### a. School infrastructure

#### b. Other education-related programmes

(*Continued*)

Source: Colombian National Planning Department. Author's calculations. Note: These graphs show the estimated coefficients of a difference-in-difference estimation that regresses the municipal per capita investment in each item on municipal certification for each year from 1997 to 2015. Dots represent estimated coefficients and the lines their corresponding confidence intervals. Municipal investment had a logarithmic transformation for the ease of interpretation.

#### **References**

Bonet, Jaime; Pérez, Javier; and Ayala, Jhorland (2014) 'Contexto histórico y evolución del SGP en Colombia', Documentos de Trabajo sobre

Administrative decentralisation and its impacts 367

Economía Regional No 205. http://dx.doi.org/10.13140/RG.2.2.10598.01606

Administrative decentralisation and its impacts 369

Wang, Dongqing and Fawzi, Wafaie W. (2020) 'Impacts of School Feeding on Educational and Health Outcomes of School-Age Children and Adolescents in Low- and Middle-Income Countries: Protocol for a Systematic Review and Meta-analysis', *Syst Rev*, vol.9, p.55. https://doi.org/10.1186/s13643-020-01317-6

# Decentralised Governance

### Crafting Effective Democracies Around the World

#### Edited by Jean-Paul Faguet and Sarmistha Pal

For developing countries, decentralising power from central government to local authorities holds the promise of deepening democracy, empowering citizens, improving public services and boosting economic growth. But the evidence on when and how decentralisation can bring these benefits has been mixed. Under the wrong conditions, decentralised power can be captured by unrepresentative elites or undermined by corruption and the clientelistic distribution of public resources. The picture is complex, and we still do not understand enough about what factors can contribute to creating better local government, and to what effect.

Decentralised

Governance

Crafting Effective Democracies

Edited by

Jean-Paul Faguet and Sarmistha Pal

Around the World

Decentralised Governance

Jean-Paul Faguet

& Sarmistha Pal

Decentralised Governance brings together a new generation of political economy studies that explore these questions analytically, blending theoretical insights with empirical innovation. Individual chapters provide fresh evidence from around the world, including broad cross-country data as well as detailed studies of Bangladesh, India, Pakistan, China, Indonesia, Ghana, Kenya and Colombia. They investigate the pros and cons of decentralisation in both democratic and autocratic regimes, and the effects of critical factors such as advances in technology, citizen-based data systems, political entrepreneurship in ethnically diverse societies, and reforms aimed at improving transparency and monitoring.

This wide-ranging volume examines the conditions under which devolving power can intensify democratic competition, boost transparency, and improve local governance, providing examples of good and bad practice in both. It is essential reading for researchers investigating decentralised governance, development and democratisation, and for policymakers and practitioners drawing lessons for future reforms.

"An essential and long-awaited book on the effects of decentralisation in developing countries from a comparative perspective. Its reading will help to understand the complexity of decentralised governance and the importance of the role of political, social and cultural variables. It is a must-read for researchers, practitioners and anyone interested in the complexity of policy-making around the world."

> Professor José M. Ruano, Director of the Complutense School of Government, Complutense University of Madrid