Education Policy and Intergenerational Educational Persistence: Evidence from rural Benin

This paper employs a nonlinear difference-in-differences approach to empirically examine the Maximally Maintained Inequality (MMI) hypothesis in rural Benin. The findings of this study confirm the MMI hypothesis. In particular, it is observed that when 76% of educated parents choose to educate their daughters in the absence of educational programs, in contrast to only 37% among non-educated parents, the average impact of tuition fee subsidy on enrollment probability in primary schools stands at 3.8\% for non-educated households and 0.27% for educated households. Conversely, in cases where only 27% of educated parents decide to educate their daughters without education programs, the average effect of tuition fee waivers on enrollment probability in primary schools increases to 19.64\% for non-educated households and 24\% for educated households. From the analysis of household education decisions influenced by a preference for education and budget constraints, three key conclusions emerge to explain the mechanism behind the MMI. Firstly, when the income advantage of educated households compared to non-educated households is significantly high, irrespective of the level of their preference advantage, reducing the financial cost of education induces a greater shift in education decisions among non-educated households. Secondly, in situations where educated households do not possess an income advantage relative to non-educated households, the reduction in education-related financial costs leads to a more pronounced change in education decisions among educated households. Lastly, for the low-income advantage of educated households, as the income advantage of educated households increases, non-educated households respond more to education policy than educated parents, if the preference advantage of educated households is relatively smaller.