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This dissertation analyzes the effect of family background and local environments on the provision, efficiency and quality of public education in Colombia, with special emphasis on initial family endowments. The central hypothesis of this dissertation is that differences in family background and neighborhood living environment define the effectiveness of public resources in education. These differences determine the long-run path of human capital accumulation and thus deepen existing social inequalities.

This research focuses on the characteristic features of family and local environments in which individuals and families take their decisions on their own investment in education. The analysis begins from an aggregate macroeconomic viewpoint followed by a more microeconomic perspective. Econometric analyses diagnose the relevant factors and mechanisms that explain inequalities in the provision of educational services and consequently in student performance.

The study takes distance from traditional approaches that emphasize efficiency problems in the supply of educational services and in the operative faults of financial models for the supply of education. The analysis explores the explanatory sources of inequality in the use of public resources. The general conclusion is that availability of public resources is a necessary but not sufficient condition for their social appropriation. Explanatory factors of this situation are to be found in the existence of drastic credit constraints, extreme unequal social conditions (in Colombia and Latin America), and striking differences in initial family endowments.

Econometric exercises demonstrate intra-cluster correlations and differences among school performances are affected by the availability of resources at the school level and also by socioeconomic and demographic profiles of the students. The variability of students´ proficiency levels is highly correlated with availability of school resources and also with variables related to school environments.  The analysis of learning environments at home at an early age yields evidence in favor of recent vital cycle theories that place emphasis on home conditions as key explanatory factors for later school achievements.

The study contends that, as long as family characteristics and school environments remain unchanged for low income strata of the population, the effectiveness of public resources devoted to education will be low. Policies centered on resource allocation while disregarding initial social inequalities will certainly face insurmountable obstacles. An integrated approach that allocates resources and simultaneously faces social inequality is unavoidable in order to overcome these fundamental problems in the effectiveness of public education as an instrument of soil policy in the Colombia, and by extrapolation,  to Latin America in general.