Local education spending mandates: Indonesia’s 20 percent rule

ABSTRACT Education spending mandates are popular around the world, especially among central governments in large, decentralized nations, who find that they may be useful in influencing varied local fiscal behavior. I evaluate Indonesia’s education spending mandate policy, which insists that district governments allocate at least 20 percent of their budgets to education. I find that the mandate has indeed induced some districts to spend more on education than they otherwise might have, thereby meeting the official target. However, the evidence indicates that the local spending mandate has had no significant effect on improving school participation and learning outcomes.