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Large-Scale Education Reform in General Equilibrium: Regression Discontinuity Evidence from India

Author

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  • Gaurav Khanna

Abstract

The economic consequences of large-scale government investments in education depend on general equilibrium effects in both the labor market and the education sector. I develop a general equilibrium model capturing the consequences of massive countrywide schooling initiatives. I provide unbiased estimates of the model’s elasticities, using a regression discontinuity derived from Indian government policy. The earnings returns to a year of education are 13.4%, and the general equilibrium labor market effects substantially depress returns, by 6.6 percentage points. These general equilibrium effects have distributional consequences across cohorts and skill groups, whereby unskilled workers are better off and skilled workers worse off.

Suggested Citation

  • Gaurav Khanna, 2023. "Large-Scale Education Reform in General Equilibrium: Regression Discontinuity Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 131(2), pages 549-591.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/721619
    DOI: 10.1086/721619
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    Cited by:

    1. Crawfurd, Lee, 2024. "Feasibility first: Expanding access before fixing learning," International Journal of Educational Development, Elsevier, vol. 104(C).
    2. Minki Kim, 2025. "The Macroeconomic Consequences of Malaria Eradication in Sub-Saharan Africa," CRC TR 224 Discussion Paper Series crctr224_2025_690, University of Bonn and University of Mannheim, Germany.
    3. Shunsuke Imai & Yuta Okamoto, 2023. "Kernel Choice Matters for Local Polynomial Density Estimators at Boundaries," Papers 2306.07619, arXiv.org, revised Jan 2026.
    4. Sam Asher & Kritarth Jha & Paul Novosad & Anjali Adukia & Brandon Tan, 2026. "Residential Segregation and Unequal Access to Local Public Services in India: Evidence from 1.5m Neighborhoods," NBER Working Papers 34818, National Bureau of Economic Research, Inc.
    5. Roodman, David, 2023. "Large-Scale Education Reform in General Equilibrium: Regression Discontinuity Evidence from India - Comment," I4R Discussion Paper Series 70, The Institute for Replication (I4R).
    6. Nguyen, The Linh Bao, 2025. "Affirmative action, Education and Labor market outcomes in Vietnam," Economics of Education Review, Elsevier, vol. 109(C).
    7. Chiplunkar, Gaurav & Weaver, Jeffrey, 2023. "Marriage markets and the rise of dowry in India," Journal of Development Economics, Elsevier, vol. 164(C).
    8. Bargain, Olivier B. & Vincent, Rose Camille & Caldeira, Emilie, 2025. "Shine a (night)light: Decentralization and economic development in Burkina Faso," World Development, Elsevier, vol. 187(C).
    9. Likai Chen & Georg Keilbar & Liangjun Su & Weining Wang, 2023. "Inference on many jumps in nonparametric panel regression models," Papers 2312.01162, arXiv.org, revised Jan 2025.
    10. Hall, Stephen G. & O’Hare, Bernadette, 2024. "A model of the impact of government revenue and quality of governance on schooling," International Journal of Educational Development, Elsevier, vol. 108(C).
    11. Bobba, Matteo & Frisancho, Veronica & Pariguana, Marco, 2016. "Perceived Ability and School Choices: Experimental Evidence and Scale-up Effects," TSE Working Papers 16-660, Toulouse School of Economics (TSE), revised Mar 2026.
    12. Beuermann, Diether W. & Bottan, Nicolas L. & Hoffmann, Bridget & Jackson, C. Kirabo & Vera-Cossio, Diego, 2024. "Does education prevent job loss during downturns? Evidence from exogenous school assignments and COVID-19 in Barbados," European Economic Review, Elsevier, vol. 162(C).
    13. Amory Gethin, 2023. "Distributional Growth Accounting: Education and the Reduction of Global Poverty," Working Papers halshs-04423765, HAL.
    14. Alderman, Harold & Aurino, Elisabetta & Baffour, Priscilla Twumasi & Gelli, Aulo & Turkson, Festus Ebo & Wong, Brad, 2025. "Assessing the overall benefits of programs enhancing human capital and equity: a new method with an application to school meals," Economics of Education Review, Elsevier, vol. 106(C).
    15. Yasser Razak Hussain & Pranab Mukhopadhyay, 2023. "How Much do Education, Experience, and Social Networks Impact Earnings in India? A Panel Data Analysis Disaggregated by Class, Gender, Caste and Religion," SAGE Open, , vol. 13(4), pages 21582440231, December.
    16. David J. Deming & Mikko I. Silliman, 2024. "Skills and Human Capital in the Labor Market," NBER Working Papers 32908, National Bureau of Economic Research, Inc.
    17. Yi Chen & Ziying Fan & Xiaomin Gu & Li-An Zhou, 2024. "Evaluating the effects of a massive rural school expansion in pre-reform China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(1), pages 1-39, March.
    18. Busso, Matias & Montaño, Sebastián & Muñoz-Morales, Juan & Pope, Nolan G., 2024. "The unintended consequences of merit-based teacher selection: Evidence from a large-scale reform in Colombia," Journal of Public Economics, Elsevier, vol. 239(C).

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