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Upping the ante: the equilibrium effects of unconditional grants to private schools

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  • Andrabi,Tahir
  • Das,Jishnu
  • Khwaja,Asim Ijaz
  • Ozyurt,Selcuk
  • Singh,Niharika

Abstract

This paper tests for financial constraints as a market failure in education in a low-income country. In an experimental setup, unconditional cash grants are allocated to one private school or all private schools in a village. Enrollment increases in both treatments, accompanied by infrastructure investments. However, test scores and fees only increase in the setting of all private schools along with higher teacher wages. This differential impact follows from a canonical oligopoly model with capacity constraints and endogenous quality: greater financial saturation crowds-in quality investments. The findings of higher social surplus in the setting of all private schools, but greater private returns in the setting of one private school underscore the importance of leveraging market structure in designing educational subsidies.

Suggested Citation

  • Andrabi,Tahir & Das,Jishnu & Khwaja,Asim Ijaz & Ozyurt,Selcuk & Singh,Niharika, 2018. "Upping the ante: the equilibrium effects of unconditional grants to private schools," Policy Research Working Paper Series 8563, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8563
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    Cited by:

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    3. Athira Vinod, 2024. "Affirmative action and private education expenditure by disadvantaged groups: Evidence from India," Discussion Papers 2024-02, University of Nottingham, CREDIT.
    4. Sabrin Beg & Waqas Halim & Adrienne M. Lucas & Umar Saif, 2022. "Engaging Teachers with Technology Increased Achievement, Bypassing Teachers Did Not," American Economic Journal: Economic Policy, American Economic Association, vol. 14(2), pages 61-90, May.
    5. Abhijit Banerjee & Rukmini Banerji & James Berry & Esther Duflo & Harini Kannan & Shobhini Mukerji & Marc Shotland & Michael Walton, 2017. "From Proof of Concept to Scalable Policies: Challenges and Solutions, with an Application," Journal of Economic Perspectives, American Economic Association, vol. 31(4), pages 73-102, Fall.
    6. Sonia Bhalotra & Damian Clarke & Joseph Flavian Gomes & Atheendar Venkataramani, 2023. "Maternal Mortality and Women’s Political Power," Journal of the European Economic Association, European Economic Association, vol. 21(5), pages 2172-2208.
    7. Bhalotra, Sonia R. & Clarke, Damian & Gomes, Joseph & Venkataramani, Atheendar, 2018. "Maternal Mortality and Women's Political Participation," IZA Discussion Papers 11590, Institute of Labor Economics (IZA).
    8. Tahir Andrabi & Jishnu Das & Asim I. Khwaja & Selcuk Ozyurt & Niharika Singh, 2020. "Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools," American Economic Review, American Economic Association, vol. 110(10), pages 3315-3349, October.
    9. Isaac Mbiti & Karthik Muralidharan & Mauricio Romero & Youdi Schipper & Constantine Manda & Rakesh Rajani, 2019. "Inputs, Incentives, and Complementarities in Education: Experimental Evidence from Tanzania," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1627-1673.
    10. Ansari, Ali H., 2020. "Cream skimming? Evaluating the access to Punjab’s public-private partnership programs in education," International Journal of Educational Development, Elsevier, vol. 72(C).
    11. Christopher Neilson & Michael Dinerstein & Sebastián Otero, 2020. "The Equilibrium Effects of Public Provision in Education Markets: Evidence from a Public School Expansion Policy," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..

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    More about this item

    Keywords

    Educational Sciences; Economics of Education; Education Finance; Effective Schools and Teachers; Educational Institutions&Facilities; Governance Diagnostic Capacity Building; Macroeconomic Management; Economic Forecasting; Armed Conflict;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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