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The Key Importance of Providers’ Autonomy and Incentives

An interesting illustration of this comes from the case study on Chile and Uruguay. Both had highly centralized educational systems until the early 1980s and had relatively high levels of coverage by Latin American standards

(higher in Uruguay than in Chile). Chile then opted for a highly decentralized model, in which schools have different degrees of autonomy and are administered by the local governments (“municipios”), while Uruguay continued to work in an extremely centralized and hierarchical way.18

Results in chile have tended to be superior to those in uruguay since then, in terms of enrollment hgures, improvement in student tests results and school progression (reduction of dropouts and repetition rates). Even more notably, the Chilean system has performed better on equity terms, as all these variables have improved more for the poorest students in Chile, while inequality in access and outcomes has increased in uruguay, despite the fact that Uruguay has always had a better income distribution and that resistance to decentralization and school autonomy in this country was largely based on equity arguments.

Though such a difference in results cannot be attributed to a single factor like decentralization, but rather to the cumulative effects of many changes (including the establishment of public information flows—see below— teachers incentives and support for special programs), econometric results show a significant and positive association of school autonomy in allocation of resources with differences in repetition rates and in students’ tests results between Chile and Uruguay,19 after controlling for individual characteristics, grade and school inputs. The results also show that differences in repetition rates in secondary education largely explain differences in quality outcomes between Uruguay and Chile.20 When analyzing each country separately, the positive marginal association between autonomy in resource allocation21 and test results remains strong in Chile, where the level of autonomy in public and subsidized private schools, as well as the amount of subsidy per poor student, depends on their academic results.22 In Uruguay, in contrast, the positive association between school autonomy and outcomes is closely linked to the type of provision, as public schools have no autonomy at all.

in addition, these results were found to be especially strong at lower quartiles of school socioeconomic status, where large differences between the two countries are observed. School autonomy appears to have led to special care given to reducing repetition and dropout rates, thus benefiting students especially from low-income backgrounds and contributing to explain differences in equity results within the two countries.

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