Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools

Tests for 铿乶ancial constraints by experimentally allocating unconditional cash grants to schools in a village

From:
Foreign, Commonwealth & Development Office
Published
23 July 2018
Country:
Pakistan
Document Type:
Working Paper
Theme:
Education
First published:
1 July 2018
Authors:
Andrabi, T, Das, A.I., Ozyurt, S and Singh, N

Abstract

We test for 铿乶ancial constraints as a market failure in education in a low-income country by experimentally allocating unconditional cash grants to either one (L) or to all (H) private schools in a village. Enrollment increases in both treatments, accompanied by infrastructure investments. However, test scores and fees only increase in H along with higher teacher wages. This di铿�erential impact follows from a canonical oligopoly model with capacity constraints and endogenous quality: greater 铿乶ancial saturation crowds-in quality investments. Higher social surplus in H, but greater private returns in L underscores the importance of leveraging market structure in designing educational subsidies.

This work is part of the Department for International Development鈥檚 鈥楻esearch on Improving Systems of Education鈥� (RISE) Programme

Citation

Andrabi, T.; Das, A.I.; Ozyurt, S.; Singh, N. (2018). Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools. RISE Working Paper 18/023

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Published 23 July 2018
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