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.