Can school centralization foster human capital accumulation? A quasi‐experiment from early twentieth‐century Italy

Abstract

This article shows that a shift towards a more centralized school system can benefit countries that are characterized by poor levels of human capital and large regional disparities in education. In 1911, Italy moved from a fully decentralized primary school system towards centralization through the Daneo-Credaro Reform. The design of the Reform allows us to compare treated municipalities with those that retained school autonomy. Our quasi-experiment, based on propensity score matching (PSM), shows that centralization substantially increased the pace of human capital accumulation. Treated municipalities were characterized by a 0.43 percentage-point premium on the average annual growth of literacy between 1911 and 1921. We discuss some of the channels through which the new legislation affected primary schooling and literacy, with important implications for long-term economic growth.H uman capital formation is widely acknowledged as one of the main factors of economic growth, and this is supported by several well-established theoretical models. 1 Empirical evidence has confirmed that human skills and abilities are central to economic performance in the present day, as well as in the past. 2 As a result of this, one of the crucial themes investigated by the literature is the way that school systems are organized; that is, the extent to which schooling is managed and funded by local or central levels of government. Several pros and cons of * Authors' Affiliations: Gabriele Cappelli, University of Siena and University of Barcelona; Michelangelo Vasta, University of Siena. † We wish to thank one of the editors of this journal, Giovanni Federico, and three anonymous referees, for their constructive and very useful comments. The article also benefited from helpful feedback from

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