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

  • Paulo Bastos

    ()

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

  • Odd Rune Straume

    ()

    (Department of Economics, University of Minho)

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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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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