intermediate economic analysis of education sector projects appropriate private-public roles:...
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Intermediate Economic Analysis of Education Sector Projects
Appropriate Private-Public Roles:
Analyzing Interactions
Emmanuel Jimenez
22 February 2000
Analyzing Public-Private Interactions
• Game and General Lessons
• How should one analyze the private option in education projects?– Principles– Example from the Philippines
Q1: The figure below shows:a) Private education exp as % of total b) Public education exp as % of total
0% 50% 100%
Malaysia
Bolivia
GhanaUSA
Germany UgandaSierra Leone
Q1. The figure below shows:a) Private education exp as % of total b) Public education exp as % of total
0% 50% 100%
S. AfricaMalaysia
BoliviaFranceUK
VenezuelaGhanaUSA
Indon.German.
PeruUgandaSierra LeoneS. Korea
Netherlands
Q2. The figure below shows (secondary)a) Private education enrol as % of total b) Public education enrol as % of total
0% 50% 100%
USAAustraliaKorea Chile
Belgium
Netherlands
Q2. The figure below shows (secondary)a) Private education enrol as % of total b) Public education enrol as % of total
0% 50% 100%
MexicoUSANigerCyprus
KuwaitFrance
AustraliaKorea Chile
Belgium
NetherlandsMauritius
AnswersQ1: The figure below shows:
a) Private education exp as % of total
0% 50% 100%
S. AfricaMalaysia
BoliviaFranceUK
VenezuelaGhanaUSA
Indon.German.
PeruUgandaSierra Leone
Source: Psacharopoulos and Nguyen 1995 “Fighting Poverty: the role of government and the private sector” World Bank.
Netherlands
Answers Q2: The figure below shows:
a) Private education enrol as % of total
0% 50% 100%
MexicoUSANigerCyprus
KuwaitFrance
AustraliaKorea Chile
Belgium
NetherlandsMauritius
Options for InterventionDegree of public financing
100%
0% 100%Degree of public provision
Unsubsidized privatesector (Phils. Tertiary)
Voucher supportedschools; Regulatedpriv schools (Neth, Bel)
Public schools with no costrecovery (many)
Public facilitieswith cost recovery(US universities)
What Lessons?
• Public intervention through finance is different from provision
• It’s hard to generalize where the private sector may be large.
Enrollment in Slums in Lahore• Data: 1,000 HHs in 26 slum areas
• % of children in HHs living on less than $1/day: 55%
0102030405060708090
Bot 14% Next41%
Top 5% All
No schoolPrivatePublic
Percent of Children Enrolled in Lahore by Income Group, School type
Alderman, Orzem and Paterno, “School Quality, Cost and Public/Private School Choice of Low Income HHs in PakistanWP 2, Impact Evaluation of Education Reforms, DECRG, World Bank 1996
What Lessons?
• Public intervention through finance is different from provision
• It’s hard to generalize where the private sector may be large.
• All economic arguments for public intervention are for finance and NOT provision
Market Failures in Education
Characteristic• Excludable and Rival?• Externalities
– Productivity
– Nation-bldg, community
• Capital Mkt Failures
• None• Primary Levels
Research
• Higher Education
If there are no economic reasons for public schools, why are there
so many of them?• Regulatory capacity
• Political and social inertia
In this setting, what does it mean for project analysis?
• Get information on the private sector: size, who acceses, where.
• If there is political room to use public resources to expand private, – compare private-public alternatives– analyze regulatory vs provider capacity
• Even if politically infeasible to expand private, analyze the NET effect of public on quantity, quality, costs and equity.
Comparing Public and Private Options
• Comparisons of private-public must hold constant for socioeconomic characteristics
• Also must hold constant for selection
• Done for the Philippines in the 1980s using household-school matching survey.
Private Sec Schools deliver better education at lower cost
0
0.2
0.4
0.6
0.8
1
1.2
CostAchieve.
Ratio of private to public cost and Achievement
Estimating NET Impacts
What happens to quantity when the public sector expands?
• Build more schools:– attract more students who didn’t go to school– attract more students from private schools
• Increase subsidies:– attract more students into schools– cause private spending to decline.
Public as % of Total Enrollments, Philippines, 1982-1996
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
All Levels Elementary Secondary Tertiary
95% 93%
54%
69%
10%
21% 23%
77% 78%
How to Estimate the Effects
• Data: 1987-98 provincial data
• Regress: private secondary enrollment on: – population– regional domestic product– standardized test scores (public/private)– tuition (public/private)
Philippines: Effect of Enrolling 10 more students in public
secondary schools
-4
-2
0
2
4
6
8
Priv EnrlTot Enrl