Introducing a performance-based component into Jakarta's school grants: What do we know about its impact after three years?

Using administrative data, this paper evaluates the early impact of introducing a performance-based component into Jakarta's long-standing school grant program on learning outcomes. The authors use difference-in-differences and regression discontinuity approaches to identify the component's impact on both government primary and junior secondary schools. Learning outcomes improved in primary schools at the bottom of the performance distribution, which narrowed the performance gaps between schools. However, the component had a negative impact on the better performing primary schools. Overall, primary examination scores fell slightly but this effect was only temporary. In contrast, the performance-based component improved examination scores in junior secondary schools. This impact seems to have been greatest among better-performing schools, thus widening the performance gap between these schools and those whose performance was worse. The data suggest that the main impact of the performance-based grant in terms of learning outcomes operated through an increase in competition among schools to earn the performance-based grant rather than through receipt of the actual grant funds.