The effect of financial decentralization on the quality of education in the provinces of Iran: A panel co-integration approach

Over the past few decades, there has been a global trend towards the decentralization of governments to the efficient provision of public goods and services. Providing uniform and one-sided training under centralized system supervision may lead to lack of competition and inefficient use of public resources. In this regard, this study seeks to investigate the relationship between financial decentralization and the quality of education in the provinces of Iran. In order to obtain a long-term relationship, FMOLS, DOLS and PMG methods have been used for the period 2006 to 2018. The results showed that the effect of financial decentralization on the number of high school graduates is negative and significant. In other words, financial decentralization has had a negative effect on the number of high school graduates. Also, the effect of income decentralization on educational per capita is positive and significant. This means that increasing income decentralization has increased the per capita education of each student, which increases the quality of education in schools. But the decentralization relationship is cost negative and significant. In addition, the effect of financial decentralization on the teacher-student ratio is positive and significant. Therefore, income and cost decentralization will increase the teacher-student ratio and thus increase the quality of education.