Working Paper

18/023

Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools

Authors

Image of Jishnu Das

Jishnu Das

RISE Pakistan

Georgetown University

Image of Asim I. Khwaja

Asim I. Khwaja

RISE Pakistan

Harvard Kennedy School

Selçuk Özyurt

York University

Niharika Singh

Columbia University

We test for financial constraints as a market failure in education in a low-income country by experimentally allocating unconditional cash grants to either one (L) or to all (H) private schools in a village. Enrollment increases in both treatments, accompanied by infrastructure investments. However, test scores and fees only increase in H 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. Higher social surplus in H, but greater private returns in L underscores the importance of leveraging market structure in designing educational subsidies.

 

Please note - to access the links within the paper, please download the PDF (right-click, download linked file).

Citation:

Andrabi et al. 2018.  Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools. RISE Working Paper Series. 18/023. https://doi.org/10.35489/BSG-RISE-WP_2018/023