Publication: School Inputs, Household Substitution, and Test Scores
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Date
2013-04
ISSN
1945-7782
Published
2013-04
Author(s)
Dercon, Stefan
Habyarimana, James
Krishnan, Pramila
Muralidharan, Karthik
Sundararaman, Venkatesh
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Abstract
Empirical studies of the relationship between school inputs and test scores typically do not account for household responses to changes in school inputs. Evidence from India and Zambia shows that student test scores are higher when schools receive unanticipated grants, but there is no impact of grants that are anticipated. We show that the most likely mechanism for this result is that households offset their own spending in response to anticipated grants. Our results confirm the importance of optimal household responses and suggest caution when interpreting estimates of school inputs on learning outcomes as parameters of an education production function.
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Publication School Inputs, Household Substitution, and Test Scores(2011-04-01)Empirical studies of the relationship between school inputs and test scores typically do not account for the fact that households will respond to changes in school inputs. This paper presents a dynamic household optimization model relating test scores to school and household inputs, and tests its predictions in two very different low-income country settings -- Zambia and India. The authors measure household spending changes and student test score gains in response to unanticipated as well as anticipated changes in school funding. Consistent with the optimization model, they find in both settings that households offset anticipated grants more than unanticipated grants. They also find that unanticipated school grants lead to significant improvements in student test scores but anticipated grants have no impact on test scores. 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