Comment by Riaz Haq on June 11, 2023 at 10:44am

The education spending multiplier: Evidence from schools in Pakistan
Tahir Andrabi Natalie Bau Jishnu Das Naureen Karachiwalla Asim Ijaz Khwaja / 11 Jun 2023

https://cepr.org/voxeu/columns/education-spending-multiplier-eviden...


Conclusion
Our first main result, that grants to public schools increased test scores, contrasts with an earlier literature where null effects were more common (e.g. Das et. al. 2013, Mbiti et. al. 2019). We may now need to move beyond such ‘grant pessimism’ precisely because we have learned from the previous failures. In contrast to previous grants in India and Zambia, which were offset by parents because they were small, the grants here were much larger and could be used for infrastructure improvements (Das et al. 2013). Indeed, grant size and test score improvements are positively correlated in this programme.

In addition, the schools could use the grants to hire teachers on temporary contracts. Again, this policy reflected what we had learned from prior research, which has consistently shown that teachers hired on temporary contracts may be more effective because they face stronger career incentives (Duflo et al. 2015, Muralidharan and Sundararaman 2013, Bau and Das 2020).

Finally, to avoid the problems of centrally mandated expenditures that are not responsive to local needs as well as potential misuse, schools worked with a reputed NGO and a reconstituted school council to determine investment priorities that were then funded through the grant.

Beyond showing that public school grants can increase test scores, this study demonstrates the existence of a large education multiplier from the public to the private sector. Hundreds of millions of children live in neighbourhoods/villages with substantial school choice, and many of the schools that they can choose from are private schools that survive on school fees. In this highly interconnected world, the idea that there are `programmes for public schools’ and `programmes for private schools’ and that the two can be kept separate is no longer tenable. Failing to account for the effect of public sector interventions on the private sector - ex-ante in the design of the programme and ex-post in its evaluation – leads to less effective interventions and inaccurate evaluations. In our case, restricting the focus to public schools would have led to an entirely different estimate of the programme’s cost effectiveness.

While we show that taking the private sector into account is crucial, spillovers on private schools need not always be positive. Dinerstein and Smith (2021) find that in New York City a public-school improvement programme led to children leaving private schools, and these schools then shutting down. In the Dominican Republic, Nielson et al. (2020) show that a huge school construction programme led to the closure of some private schools, but with quality improvements among the survivors. But across all these studies, the clear message is that the days when public school programmes would have effects only on public schools are over. We need to think of the full schooling environment and not just the part in which we have intervened.

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