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Preschool education in Brazil:Does public supply crowd out private enrollment?

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  • Paulo Bastos

    ()
    (Research Department, Inter-American Development Bank, United States)

  • Odd Rune Straume

    ()
    (Department of Economics, University of Minho)

Abstract

We examine if an expansion in the supply of public preschool crowds-out private enrollment using rich data for municipalities in Brazil from 2000-2006, where federal transfers to local governments change discontinuously with given population thresholds. Results from a regression-discontinuity design reveal that larger federal transfers lead to a significant expansion of local public preschool services, but show no effects on the quantity or quality of private provision. These findings are consistent with a theory in which households differ in willingness-to-pay for preschool services, and private suppliers optimally adjust prices in response to an expansion of lower-quality, free-of-charge public supply.

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Bibliographic Info

Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 16/2013.

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Date of creation: 2013
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Handle: RePEc:nip:nipewp:16/2013

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Keywords: Preschool education; private and public provision; crowding-out.;

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  1. Andrew Cohen & Beth Freeborn & Brian McManus, 2013. "Competition And Crowding Out In The Market For Outpatient Substance Abuse Treatment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(1), pages 159-184, 02.
  2. Daphna Bassok & Maria Fitzpatrick & Susanna Loeb, 2012. "Does State Preschool Crowd-Out Private Provision? The Impact of Universal Preschool on the Childcare Sector in Oklahoma and Georgia," NBER Working Papers 18605, National Bureau of Economic Research, Inc.
  3. Fernanda Brollo & Tommaso Nannicini & Roberto Perotti & Guido Tabellini, 2013. "The Political Resource Curse," American Economic Review, American Economic Association, vol. 103(5), pages 1759-96, August.
  4. Christina Paxson & Norbert Schady, 2007. "Cognitive Development among Young Children in Ecuador: The Roles of Wealth, Health, and Parenting," Journal of Human Resources, University of Wisconsin Press, vol. 42(1).
  5. Michael Baker & Jonathan Gruber & Kevin Milligan, 2006. "Universal Childcare, Maternal Labor Supply, and Family Well-Being," Working Papers id:547, eSocialSciences.
  6. Berlinski, Samuel & Galiani, Sebastian & Gertler, Paul, 2009. "The effect of pre-primary education on primary school performance," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 219-234, February.
  7. Bastos, Paulo & Cristia, Julian, 2012. "Supply and quality choices in private child care markets: Evidence from São Paulo," Journal of Development Economics, Elsevier, vol. 98(2), pages 242-255.
  8. Elizabeth U. Cascio, 2009. "Maternal Labor Supply and the Introduction of Kindergartens into American Public Schools," Journal of Human Resources, University of Wisconsin Press, vol. 44(1).
  9. Gruber, Jonathan & Simon, Kosali, 2008. "Crowd-out 10 years later: Have recent public insurance expansions crowded out private health insurance?," Journal of Health Economics, Elsevier, vol. 27(2), pages 201-217, March.
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