Preschool Education in Brazil: Does Public Supply Crowd Out Private Enrollment?

Abstract

This paper examines whether an expansion in the supply of public preschool crowds out private enrollment. The paper uses rich data for municipalities in Brazil from 2000 to 2006, where federal transfers to local governments change discontinuously with given population thresholds. The results from a regression-discontinuity design reveal that larger federal transfers lead to a significant expansion of local public preschool services, but show no evidence of crowding out of private enrollment. This finding is consistent with a theory in which households differ in their willingness to pay for preschool services, and private suppliers optimally adjust prices in response to an expansion of lower-quality, free-of-charge public supply.

Keywords: Early Childhood Development, Reproductive Health, Early Child and Children & #39, Early Child and Children's Health, Nutrition, Effective Schools and Teachers, Educational Institutions & Facilities, Educational Sciences, Small Private Water Supply Providers, Town Water Supply and Sanitation, Sanitation and Sewerage, Engineering, Water Supply and Sanitation Economics, Water and Human Health, Health and Sanitation, Sanitary Environmental Engineering, Environmental Engineering, Tertiary Education