Working Paper: NBER ID: w30929
Authors: Tahir Andrabi; Natalie Bau; Jishnu Das; Naureen Karachiwalla; Asim Ijaz Khwaja
Abstract: We estimate the equilibrium effects of a public-school grant program administered through school councils in Pakistani villages with multiple public and private schools and clearly defined catchment boundaries. The program was randomized at the village-level, allowing us to estimate its causal impact on the market. Four years after the start of the program, test scores were 0.2 sd higher in public schools. We find evidence of an education multiplier: test scores in private schools were also 0.2 sd higher in treated markets. Consistent with standard models of product differentiation, the education multiplier is greater for those private schools that faced a greater threat to their market power. Accounting for private sector responses increases the program's cost-effectiveness by 85% and affects how a policymaker would target spending. Given that markets with several public and private schools are now pervasive in low- and middle-income countries, prudent policy requires us to account for private sector responses to public policy, both in their design and in their evaluation.
Keywords: Public Spending; Education; Private Schools; Public Schools; Pakistan
JEL Codes: H44; H52; I22; I25; I28; O12; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| public school grant program (I28) | average test scores in public schools (I21) |
| public school grant program (I28) | average test scores in private schools (I21) |
| competition from public schools (J45) | test score improvements in private schools (I21) |
| size of grants (I28) | test scores in both sectors (C12) |
| public school funding (I22) | private sector responsiveness (L33) |
| positive externalities on private school performance (H52) | cost-effectiveness of the program (H43) |