Vouchers for Basic Education in Developing Countries: A Principal-Agent Perspective

25 Pages Posted: 20 Apr 2016

See all articles by Varun Gauri

Varun Gauri

World Bank; World Bank - Development Research Group (DECRG)

Ayesha Vawda

World Bank

Date Written: March 2003

Abstract

Voucher programs consist of three simultaneous reforms: (1) allowing parents to choose schools, (2) creating intense incentives for schools to increase enrollment, and (3) granting schools management autonomy to respond to demand. As a result, voucher advocates and critics tend to talk past each other. A principal-agent framework clarifies the argument for education vouchers. Central findings from the literature, including issues related to variance in the performance measure, risk aversion, the productivity of more effort, multiple tasks, and the value of monitoring are found relevant for an analysis of vouchers. An assessment of findings on voucher programs in industrial countries, as well as a review of voucher or quasi-voucher experiences in Bangladesh, Chile, Colombia, Cote d'Ivoire, and the Czech Republic support the usefulness of the analytic framework. Gauri and Vawda conclude that vouchers for basic education in developing countries can enhance outcomes when they are limited to modest numbers of poor students in urban settings, particularly in conjunction with existing private schools with surplus capacity. The success of more ambitious voucher programs depends on an institutional infrastructure challenging to industrial and developing countries alike.

This paper - a joint product of Public Services, Development Research Group, and the Education Team, Human Development Network - is a background paper for the 2004 World Development Report.

Suggested Citation

Gauri, Varun and Vawda, Ayesha, Vouchers for Basic Education in Developing Countries: A Principal-Agent Perspective (March 2003). Available at SSRN: https://ssrn.com/abstract=636367

Varun Gauri (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/vgauri

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Ayesha Vawda

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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