Politics And Preschool: The Political Economy Of Investment In Pre-Primary Education
What drives governments with similar revenues to publicly provide very different amounts of goods for which private substitutes are available? Key examples are education and health care. This paper compares spending by Brazilian municipalities on pre-primary education - a good that is also provided privately - with spending on public infrastructure like parks and roads, which lacks private substitutes. Panel data from 1995-2008 reveal how the distribution of income affects public investment. Revenue is endogenous to investment outcomes, and the analysis addresses this problem by exploiting a 1998, nationwide education finance reform and several revisions to the policy.