This paper investigates the correlation between government expenditure on education, and school achievement. Increases in local government expenditure on education are associated with more years of schooling, but there is no evidence that municipalities with greater investments achieved better education indicators compared to others. In order to evaluate the impact of local government expenditures, we analyze the educational performance of oil producer municipalities which experienced large increases in oil output. The results show that increases in these municipalities' education expenditure were 14% higher than their neighboring coastal municipalities, but no impact on students' performance was found.
