Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment

62 Pages Posted: 25 Aug 2000 Last revised: 18 Oct 2010

See all articles by Esther Duflo

Esther Duflo

Massachusetts Institute of Technology (MIT) - Department of Economics; Abdul Latif Jameel Poverty Action Lab (J-PAL); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Bureau for Research and Economic Analysis of Development (BREAD)

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Date Written: August 2000

Abstract

Between 1973 and 1978, the Indonesian Government constructed over 61,000 primary schools throughout the country. This is one of the largest school construction programs on record. I evaluate the effect of this program on education and wages by combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program. The estimates suggest that the construction of primary schools led to an increase in education and earnings. Children ages 2 to 6 in 1974 received 0.12 to 0.19 more years of education for each school constructed per 1,000 children in their region of birth. Using the variations in schooling generated by this policy as instrumental variables for the impact of education on wages generates estimates of economic returns to education ranging from 6.8 percent to 10.6 percent.

Suggested Citation

Duflo, Esther, Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment (August 2000). NBER Working Paper No. w7860. Available at SSRN: https://ssrn.com/abstract=240061

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