Targeting and Calibrating Educational Grants for Greater Efficiency
Using grants programs to induce poor parents to send their children to school has received considerable attention as an instrument to break the inheritance of poverty. Yet, the cost of these programs tends to be quite high so that increasing their efficiency is an important issue that needs to be researched. We use the educational component of Progresa in Mexico to explore alternative targeting and calibrating schemes to achieve this purpose. We show that targeting on risk of nonenrollment instead of targeting on poverty, as currently done, would be implementable and create huge efficiency gains. To start with, this would concentrate grants on secondary school since attendance to primary school is virtually universal, saving 55% of the educational budget. Targeting the population most likely to drop out of school upon completing primary and allowing for variable transfers across beneficiaries would result in a 72% efficiency gain for that cohort over targeting on poverty and making uniform transfers by gender, reducing leakage cost from 85% to 53% of the budget. Even restricting transfers to be uniform across beneficiaries but set at the optimal level would achieve a 65% efficiency gain. However, to make the scheme easy to implement, only observable, transparent, and non-manipulable indicators of risk should be used and discrete levels of transfers offered. This would still result in a 53% efficiency gain over the current scheme.
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- Behrman, Jere R & Sengupta, Piyali & Todd, Petra, 2005. "Progressing through PROGRESA: An Impact Assessment of a School Subsidy Experiment in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 237-75, October.
- François Bourguignon & Francisco H. G. Ferreira & Phillippe G. Leite, 2002.
"Ex-ante Evaluation of Conditional Cash Transfer Programs: The Case of Bolsa Escola,"
William Davidson Institute Working Papers Series
516, William Davidson Institute at the University of Michigan.
- Bourguignon, Francois & Ferreira, Francisco H. G. & Leite, Phillippe G., 2002. "Ex-ante evaluation of conditional cash transfer programs: the case of bolsa escola," Policy Research Working Paper Series 2916, The World Bank.
- Deon Filmer & Lant Pritchett, 2001. "Estimating Wealth Effects Without Expenditure Data—Or Tears: An Application To Educational Enrollments In States Of India," Demography, Springer, vol. 38(1), pages 115-132, February.
- Behrman, Jere R & Knowles, James C, 1999. "Household Income and Child Schooling in Vietnam," World Bank Economic Review, World Bank Group, vol. 13(2), pages 211-56, May.
- Deon Filmer & Lant Pritchett, 1999. "The Effect of Household Wealth on Educational Attainment: Evidence from 35 Countries," Population and Development Review, The Population Council, Inc., vol. 25(1), pages 85-120.
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