Economics of Private Schooling Industry in Kohima, Nagaland (India)
Sudhanshu K. Mishra
December 11, 2003
The enterprise of running private schools has of late assumed the nature of an industry in India. Ever-increasing population, a race for providing education to ones children, degenerating quality of education in govt.-run schools, unlimited supply of educated youths ready to work at the lowest salary and the possibilities of earning huge profits for a modest investment together have contributed to the viability of this industry.
In Kohima, the capital city of Nagaland (India), which is our study area, there are 31 private high/higher secondary schools against only 3 govt. run schools. These private schools enroll some 25 thousand pupils while the enrolment in the govt.-run schools is barely 1.6 thousand students. These private schools employ 766 teachers and pay them an average salary which is only one third of what the govt.-run schools pay. According to the ILO (1996) definition of subsistence wages (the hourly wage sufficient to buy one kg. of the lowest priced staple cereal), the employees of these schools barely earn a subsistence wage. Nevertheless, these schools generate a revenue of Rs. 88 million of which Rs. 3.7 million is the net profit.
Our analysis shows that private schooling industry in Kohima operates in a monopolistic competition market - bordering on oligopoly. There is price leadership in determining the fees to be charged by the schools making this industry.
Number of Pages in PDF File: 18
Keywords: Private schooling industry, oligopoly, monopolistic competition, subsistence wages, Kohima, Nagaland, microeconomics of education
JEL Classification: D4, I21
Date posted: April 9, 2004