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Abstract

We explain how the decentralization of fiscal responsibility among Brazilian states between 1889 and 1930 promoted a unequal expansion in public schooling. We document how the variation in state export tax revenues, product of commodity booms, explains increases in expenditures on education,literacy, and schools per children. Yet we also find that such improvements did not take place in states that either had more slaves before abolition or cultivated cotton during colonial times. Beyond pathdependence, ours story emphasizes the interaction between colonial institutions and subsequent fiscal changes to explain radical changes in the ranking of states which persists until today.

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