Table 6 The RBF effects on Public Spending of Municipalities (Clustered Standard Errors)

||Education<br>(1)|Health<br>(2)|Sanitation,<br>Housing and<br>Urbanization<br>(3)|Social<br>(4)|Sport,<br>Culture<br>and Leisure<br>(5)|Total<br>spending<br>(6)|
|---|---|---|---|---|---|---|
|**A. DD, Results**_−_**Based Financing**<br>_β_<sup>_rbf _</sup>_−β_<sup>_pre_</sup>|0.095***<br>(0.021)|0.223*<br>(0.125)|0.671***<br>(0.139)|0.462***<br>(0.090)|0.691***<br>(0.112)|0.153***<br>(0.024)|
|**B. DD, Teaching Assistance**|||||||
|_β_<sup>_rbf_+</sup><sup>_ta _</sup>_−β_<sup>_rbf_</sup>|0.038|-0.259*|0.081|0.054|-0.015|-0.05|
||(0.031)|(0.141)|(0.175)|(0.125)|(0.173)|(0.033)|
|**C. DD, Results**_−_**Based Financing, reformulated**<br>_β_<sup>_rbf_(</sup><sup>_re_)+</sup><sup>_ta _</sup>_−β_<sup>_rbf_+</sup><sup>_ta_</sup>|-0.006|0.039|-0.213|-0.056|-0.134|-0.024|
||(0.024)|(0.070)|(0.174)|(0.184)|(0.182)|(0.021)|
|**Variation relative to the baseline mean**<br>|||||||
|_β_<sup>_rbf _</sup>_−β_<sup>_pre_</sup><br>|1.16%|3.70%|13.88%|10.46%|21.57%|2.05%|
|_β_<sup>_rbf_(</sup><sup>_re_)+</sup><sup>_ta _</sup>_−β_<sup>_rbf_+</sup><sup>_ta_</sup>|0.46%|-4.30%|1.68%|1.22%|-0.47%|-0.67%|
|_β_<sup>_rbf_(</sup><sup>_re_)+</sup><sup>_ta _</sup>_−β_<sup>_rbf_+</sup><sup>_ta_</sup>|-0.07%|0.65%|-4.41%|-1.27%|-4.18%|-0.32%|
|**Spending Defnition**|per student|per capita|per capita|per capita|per capita|per capita|
|**Dep. var. mean**|8.193|6.021|4.834|4.417|3.204|7.466|
|**Dep. var. SD**|0.375|0.504|0.948|0.843|0.988|0.276|
|**# of municipality Observations**|4,163|4,160|4,256|4,256|4,256|4,163|
|**Adj. R**_−_**Squared**|0.702|0.223|0.065|0.13|0.078|0.381|

**Notes.** _∗∗∗_ denotes significance at 1 percent, _∗∗_ at 5 percent, and _∗_ at 10 percent level. The dependent variables come from National Treasury Bureau ( _Secretaria do Tesouro Nacional_ (STN). All regressions restrict the sample to the 330 municipalities at the border between Ceará and adjacent states. The definition of border considers the three imediate municipalities at each side of _Ceará_ and _Piaúi_ , _Rio Grande do Norte_ , _Pernambuco_ and _Paraíba_ . municipality controls include the number of births in the municipality _−_ year according to the _Sistema de Nascidos Vivos_ (SINASC), and GDP per capita as provided by IBGE. The vector of dependent variables includes: (1) Natural log of education spending per student; (2) Natural log of health spending per capita; (3) Natural log of spending on sanitation, housing and urbanism per capita; (4) Natural log of spending on social assistance and social security per capita; (5) Natural log of spending on sport, leisure and culture per capita; (6) Natural log of total spending per capita. Public spending variables are deflated by the General Price Index (2017 = 100) of the _Fundação Getúlio Vargas_ . Time trends and Municipal specific time trends are included. To compare municipalities close geographically, sharing the same state border, all regressions include Border Fixed Effects. The bottom of each column presents in Panel A the DD estimates of RBF impacts, Panel B presents the effects after introducing teaching assistance, the TA component in our model; and Panel C shows the estimates of reformulating the RBF to weights for minimum standards. Standard errors are clustered by municipality and shown in parenthesis.

assistance did not affect the public spending of municipalities, especially on education. The exception is the reduction in health spending per capita (see column (2)), about _−_ 4 _._ 3% relative to the baseline mean but significant only at the level of 10%. The health sector shares some complementary services with education, such as health prevention (e.g., obesity prevention and immunization), guidance on sexual and reproductive health, etc. The efficient provision of such services with the introduction of teaching assistance might have contributed to reducing health spending, especially on primary health care. Panel C, in turn, shows that the reformulation of the RBF did not have implications on municipal public spending. The large gains in leaning with the introduction of TA and the reformulation of the RBF (see Panels B and C of Table 2) were 39