Dercon, StefanDas, JishnuHabyarimana, JamesKrishnan, PramilaMuralidharan, KarthikSundararaman, Venkatesh2012-03-192012-03-192011-04-01https://hdl.handle.net/10986/3395Empirical 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. The results suggest that naïve estimates of public education spending on learning outcomes that do not account for optimal household responses are likely to be considerably biased if used to estimate parameters of an education production function.CC BY 3.0 IGOAIDBASIC EDUCATIONBLOCK GRANTBLOCK GRANTSCASH PAYMENTSCHILDREN WITH ACCESSCLASS SIZECLASS-SIZECLASSROOMCLASSROOM MATERIALSCOMMUNITIESCORRUPTIONCREDIT MARKETSDEGREESDEMAND FOR EDUCATIONDISABILITYDISABILITY INSURANCEDISCRETIONARY FUNDINGECONOMICS OF EDUCATIONECONOMIES OF SCALEEDUCATED PARENTSEDUCATION DATAEDUCATION EXPENDITURESEDUCATION OUTCOMESEDUCATION POLICIESEDUCATION POLICYEDUCATION SECTOREDUCATION SPENDINGEDUCATIONAL ACHIEVEMENTEDUCATIONAL ATTAINMENTSEDUCATIONAL INPUTSEDUCATIONAL INVESTMENTSEDUCATIONAL MATERIALSEDUCATIONAL OUTCOMESEDUCATIONAL POLICYEDUCATIONAL SYSTEMENDOWMENTSENROLLMENT RATESEQUALITYEXPENDITURESFINANCESFINANCIAL MARKETSFINANCIAL SUPPORTFIRST GRADEFREE EDUCATIONFUNDS FOR CAPITAL EXPENDITUREGENDERGOVERNMENT EDUCATION EXPENDITUREGOVERNMENT FUNDINGGOVERNMENT-RUN SCHOOLSGRANT PROGRAMSGROSS ENROLLMENTHEAD TEACHERHOUSEHOLDSHUMAN CAPITALHUMAN CAPITAL INVESTMENTHUMAN DEVELOPMENTHUMAN RESOURCESINCLUSIONINCOME TAXINCOME TAX CREDITINDEPENDENT LEARNINGINTEREST RATEINTERNATIONAL BANKINTERVENTIONSINVESTMENT DECISIONSLABOR MARKETLEARNINGLEARNING ACHIEVEMENTLEARNING ASSESSMENTSLEARNING MATERIALSLEARNING OUTCOMESLETLEVELS OF EDUCATIONLITERACYLITERATUREMATH TEXTBOOKSMICROFINANCENATIONAL ASSESSMENTNUMBER OF STUDENTSNUMBER OF TEACHERSNUTRITIONNUTRITIONAL STATUSOPEN ACCESSPAPERSPARENT-TEACHER ASSOCIATIONPARENTAL INVOLVEMENTPERFORMANCE INDICATORSPRIMARY EDUCATIONPRIMARY ENROLLMENTPRIMARY SCHOOLPRIMARY SCHOOLSPRIVATE FUNDINGPRIVATE SCHOOLSPROPERTY TAXPROVISION OF EDUCATIONPUBLIC EDUCATIONPUBLIC FINANCEPUBLIC SCHOOLSPUPIL-TEACHER RATIORECEIPTRECEIPTSREGULAR TEACHERSREMOTE SCHOOLSRESOURCE CENTERRURAL SCHOOLSSAVINGSSCHOOL COMMITTEESSCHOOL CONSTRUCTIONSCHOOL DISTRIBUTIONSCHOOL EDUCATIONSCHOOL ENROLLMENTSCHOOL EXPENDITURESCHOOL FINANCESSCHOOL FUNDINGSCHOOL IMPROVEMENTSCHOOL INFRASTRUCTURESCHOOL LEVELSCHOOL MATERIALSSCHOOL PERFORMANCESCHOOL SIZESCHOOL STUDENTSSCHOOL SUPPLIESSCHOOL SURVEYSSCHOOL YEARSCHOOLINGSCHOOLSSHOW HOWSIGNIFICANT IMPROVEMENTSSOURCE OF FUNDSSOURCES OF FUNDSSPORTSSTUDENT ACHIEVEMENTSTUDENT BODYSTUDENT LEARNINGSTUDENT PARTICIPATIONTEACHERTEACHER PERFORMANCETEACHER SALARIESTEACHERSTEACHINGTEST SCORESTEXT BOOKSTEXTBOOKTEXTBOOKSTUITIONTYPES OF EDUCATIONUNEMPLOYMENTUNEMPLOYMENT INSURANCEURBAN AREASURBAN SCHOOLSVILLAGEVILLAGE FUNDVILLAGESWORKBOOKSWRITING MATERIALSWorld Bank10.1596/1813-9450-5629