This paper evaluates the effects of the administrative decentralization of education on teacher quality and student outcomes in Colombia. In 2001, the government established an arbitrary rule that granted municipalities with a 2002 population >100,000 almost complete autonomy to provide education services (certification). This analysis takes advantage of this rule to evaluate, using difference-in-differences and regression discontinuity methodologies, the effect of municipal autonomy on teacher quality and student outcomes, including achievement and enrollment. The control group is made up of municipalities for which the provision of education was centralized and managed by the departmental authorities. The results indicate that administrative decentralization (being certified) improves both school enrollment and student achievement as well as the quality of teachers, as measured by teachers’ education level and scores on teachers’ entry competency exams. Using a mediation analysis, the paper finds that higher-quality teachers hired by the certified municipalities partially explained the improvement in student achievement. This analysis also shows that “certified” municipalities invest more local resources in education which also contributes to explain to a much lesser extent their superior educational outcomes. Finally, the results suggest that achieving better student outcomes is less related to the amount of resources that decentralized municipalities managed and more associated with the fact that those resources seem to have been better allocated, generating significant efficiency gains. These gains may be the consequence of lower transaction costs of matching local preferences with local educational interventions.
