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

96 Pages Posted: 28 Aug 2018

See all articles by Tahir Andrabi

Tahir Andrabi

Pomona College - Department of Economics

Jishnu Das

Georgetown University; Georgetown University

Asim Ijaz Khwaja

Harvard University - Harvard Kennedy School (HKS); Center for Research on Pensions and Welfare Policies (CeRP); Bureau for Research and Economic Analysis of Development (BREAD); National Bureau of Economic Research (NBER)

Selcuk Ozyurt

Sabanci University; Harvard University

Niharika Singh

Harvard University - Harvard Kennedy School (HKS)

Multiple version iconThere are 2 versions of this paper

Date Written: August 21, 2018

Abstract

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.

Keywords: Educational Sciences, Economics of Education, Education Finance, Effective Schools and Teachers, Educational Institutions & Facilities, Governance Diagnostic Capacity Building, Macroeconomic Management, Economic Forecasting, Armed Conflict

Suggested Citation

Andrabi, Tahir and Das, Jishnu and Khwaja, Asim Ijaz and Ozyurt, Selcuk and Singh, Niharika, Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools (August 21, 2018). World Bank Policy Research Working Paper No. 8563, Available at SSRN: https://ssrn.com/abstract=3238405

Tahir Andrabi (Contact Author)

Pomona College - Department of Economics ( email )

Claremont, CA 91711
United States
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Jishnu Das

Georgetown University ( email )

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Georgetown University ( email )

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Asim Ijaz Khwaja

Harvard University - Harvard Kennedy School (HKS) ( email )

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Center for Research on Pensions and Welfare Policies (CeRP) ( email )

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Bureau for Research and Economic Analysis of Development (BREAD) ( email )

Duke University
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National Bureau of Economic Research (NBER) ( email )

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Selcuk Ozyurt

Sabanci University ( email )

SSBF
Orhanli Tuzla
─░stanbul, 34956
Turkey

HOME PAGE: http://myweb.sabanciuniv.edu/ozyurt/

Harvard University ( email )

Littauer Center
Cambridge, MA 02138
United States

HOME PAGE: http://myweb.sabanciuniv.edu/ozyurt/

Niharika Singh

Harvard University - Harvard Kennedy School (HKS)

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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