Upping the Ante : The Equilibrium Effects of Unconditional Grants to Private Schools
This paper tests for financial constraints as a market failure in education in a low-income country. In an experimental setup, unconditional cash grants are allocated to one private school or all private schools in a village. Enrollment increases i...
| Main Authors: | , , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/489361534875600698/Upping-the-ante-the-equilibrium-effects-of-unconditional-grants-to-private-schools http://hdl.handle.net/10986/30290 |
| Summary: | This paper tests for financial
constraints as a market failure in education in a low-income
country. In an experimental setup, unconditional cash grants
are allocated to one private school or all private schools
in a village. Enrollment increases in both treatments,
accompanied by infrastructure investments. However, test
scores and fees only increase in the setting of all private
schools along with higher teacher wages. This differential
impact follows from a canonical oligopoly model with
capacity constraints and endogenous quality: greater
financial saturation crowds-in quality investments. The
findings of higher social surplus in the setting of all
private schools, but greater private returns in the setting
of one private school underscore the importance of
leveraging market structure in designing educational subsidies. |
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