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Educational Investment Responses to Economic Opportunity: Evidence from Indian Road Construction

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  • Anjali Adukia
  • Sam Asher
  • Paul Novosad

Abstract

The rural poor in developing countries, once economically isolated, are increasingly being connected to outside markets. Whether these new connections crowd out or encourage educational investment is a central question. We examine the effects on educational choices of 115,000 new roads built under India's flagship road construction program. We find that children stay in school longer and perform better on standardized exams. Heterogeneity in treatment effects supports a standard human capital investment model: enrollment increases most when nearby labor markets offer high returns to educationand least when they imply high opportunity costs of schooling.

Suggested Citation

  • Anjali Adukia & Sam Asher & Paul Novosad, 2020. "Educational Investment Responses to Economic Opportunity: Evidence from Indian Road Construction," American Economic Journal: Applied Economics, American Economic Association, vol. 12(1), pages 348-376, January.
  • Handle: RePEc:aea:aejapp:v:12:y:2020:i:1:p:348-76
    DOI: 10.1257/app.20180036
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    More about this item

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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