American Economic Review Vol. 110 No. 10 2020
Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools
open access
Abstract
We assess whether financing can help private schools, which now account for one-third of primary school enrollment in low- and middle-income countries. Our experiment allocated unconditional cash grants to either one (L) or all (H) private schools in a village. In both arms, enrollment and revenues increased, leading to above-market returns. However, test scores increased only in H schools, accompanied by higher fees, and a greater focus on teachers. We provide a model demonstrating that market forces can provide endogenous incentives to increase quality and increased financial saturation can be used to leverage competition, generating socially desirable outcomes.
- DOI
- 10.1257/aer.20180924
- Volume
- 110
- Issue
- 10
- Pages
- 3315-3349
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref