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Vouchers for basic education in developing countries : a principal-agent perspective

  • Gauri, Varun
  • Vawda, Ayesha

Voucher programs consist of three simultaneous reforms: (1) allowing parents to choose schools, (2) creating intense incentives for schools to increase enrollment, and (3) granting schools management autonomy to respond to demand. As a result, voucher advocates and critics tend to talk past each other. A principal-agent framework clarifies the argument for education vouchers. Central findings from the literature, including issues related to variance in the performance measure, risk aversion, the productivity of more effort, multiple tasks, and the value of monitoring are found relevant for an analysis of vouchers. An assessment of findings on voucher programs in industrial countries, as well as a review of voucher or quasi-voucher experiences in Bangladesh, Chile, Colombia, Cote d'Ivoire, and the Czech Republic support the usefulness of the analytic framework. The authors conclude that vouchers for basic education in developing countries can enhance outcomes when they are limited to modest numbers of poor students in urban settings, particularly in conjunction with existing private schools with surplus capacity. The success of more ambitious voucher programs depends on an institutional infrastructure challenging to industrial and developing countries alike.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3005.

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Date of creation: 31 Mar 2003
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Handle: RePEc:wbk:wbrwps:3005
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  1. Le Grand, Julian, 1991. "Quasi-markets and Social Policy," Economic Journal, Royal Economic Society, vol. 101(408), pages 1256-67, September.
  2. Elizabeth King & Eric Bettinger & Erik Bloom & Joshua Angrist & Michael Kremer, 2002. "Vouchers for private schooling in colombia: Evidence from a randomized natural experiment," Natural Field Experiments 00203, The Field Experiments Website.
  3. Michaelowa, Katharina, 2001. "Primary Education Quality in Francophone Sub-Saharan Africa: Determinants of Learning Achievement and Efficiency Considerations," World Development, Elsevier, vol. 29(10), pages 1699-1716, October.
  4. J Millington & S Bradley, . "The Effect of Spatial Competition on Secondary School Exam Performance," Working Papers cr04/98, Department of Economics, University of Lancaster.
  5. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-28, March.
  6. World Bank, 2001. "Czech Republic : Enhancing the Prospects for Growth with Fiscal Stability," World Bank Publications, The World Bank, number 13864, June.
  7. Cecilia Elena Rouse, 1998. "Private School Vouchers And Student Achievement: An Evaluation Of The Milwaukee Parental Choice Program," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 553-602, May.
  8. King, Elizabeth M & Orazem, Peter F & Wohlgemuth, Darin, 1999. "Central Mandates and Local Incentives: The Colombia Education Voucher Program," World Bank Economic Review, World Bank Group, vol. 13(3), pages 467-91, September.
  9. Derek Neal, 2002. "How Vouchers Could Change the Market for Education," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 25-44, Fall.
  10. repec:lan:wpaper:4774 is not listed on IDEAS
  11. World Bank, 2001. "Czech Republic : Enhancing the Prospects for Growth with Fiscal Stability," World Bank Other Operational Studies 15690, The World Bank.
  12. repec:lan:wpaper:4347 is not listed on IDEAS
  13. Chang-Tai Hsieh & Miguel Urquiola, 2003. "When Schools Compete, How Do They Compete? An Assessment of Chile's Nationwide School Voucher Program," NBER Working Papers 10008, National Bureau of Economic Research, Inc.
  14. repec:lan:wpaper:4472 is not listed on IDEAS
  15. Ritzen, Jozef M. M. & van Dommelen, Jan & De Vijlder, Frans J., 1997. "School finance and school choice in the Netherlands," Economics of Education Review, Elsevier, vol. 16(3), pages 329-335, June.
  16. Alejandra Mizala & Pilar Romaguera, 1998. "Desempeño escolar y elección de colegios: La experiencia chilena," Documentos de Trabajo 36, Centro de Economía Aplicada, Universidad de Chile.
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