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Abstract: Whether providing additional resources to local communities leads to improved public services and better outcomes more generally, given existing management capacity and incentive and accountability structures, is an unresolved yet important question for public policy. This paper uses variation in local public resources stemming from thresholds in a population-based revenue sharing mechanism between the federal and local governments in Brazil to evaluate the effect of resources on local spending (including on education), schooling and learning using a regression-discontinuity design. Results show that transfers increase local public spending almost one for one with no evidence of crowding out own revenue or other revenue sources. Extra per capita transfers of 1000 Reais lead to about 0.3 additional years of elementary schooling and student literacy rates increase by about 4 percentage points on average. Part of this effect arises through higher teacher-student ratios in municipal elementary school systems. Results also suggest that additional resources have stronger effects in more rural and less developed parts of Brazil.