Public Value Under Constraint: Fiscal Austerity and the Conversion of Education Policy into Social Well-Being in Brazil
Public Value Under Constraint: Fiscal Austerity and the Conversion of Education Policy into Social Well-Being in Brazil

Summary/Abstract: This paper examines whether and how fiscal austerity shapes the extent to which public value in education translates into social well-being in a decentralized setting. Wetheorize fiscal austerity as a constraint that can dampen the welfare returns of public value creation by limiting policy continuity and implementation capacity. Using panel data for Brazil’s 27 federative units over 2015-2022, we estimate a hierarchical public value model in the education policy domain and test direct and mediated relationships with social wellbeing. The model is assessed via PLS-SEM, enabling the simultaneous estimation of higher order constructs and mediation effects. Public value in education is strongly and positively associated with social well-being. Fiscal austerity operates as a countervailing mechanism that conditions how fully value creation translates into welfare outcomes, yielding a competitive mediation pattern consistent with public value under constraint. The study advances public sector management research by positioning fiscal austerity not merely as contextual background but as a mechanism affecting the conversion of public value into wellbeing. Empirically, it offers comparable evidence across subnational governments and provides actionable insights for sustaining human development–oriented policies under fiscal constraint.

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