Grants and dispersion of local education spending in Brazil. Regional Studies. Since several federations rely on a decentralized system of public education, understanding local responses to intergovernmental grants is a relevant issue in regional economics. This paper investigates whether different types of grants (block, categorical and matching) increase the dispersion of education spending and impact spending inequalities across Brazilian municipalities from 2004 to 2010. The results suggest that in a decentralized fiscal system public funding based on block grants, unlike funding from categorical grants, favours differences in tastes and leads to a higher dispersion of public provision across jurisdictions. Matching grants do not produce a consistent effect on dispersion.