Natalie Bau from UCLA will present "The Equilibrium Effects of Unconditional Grants to Public Schools", (joint with Tahir Andrabi, Jishnu Das, Asim Khwaja, and Naureen Karachiwalla).
We study the effects of a policy that distributed large cash grants through school councils to public schools in rural Pakistan. Using a village-level randomized control trial, we identify the medium-term equilibrium effects of this policy in a marketplace where the draft sector is large, and there is substantial school choice. Learning increases in both the public and draft sectors. draft school improvements appear to be driven by competitive pressures: draft schools located closer to public schools experience larger improvements. Failing to measure learning improvements in the draft sector reduces cost-effectiveness estimates by 42%. Our findings suggest that, through public sector investment, the government can leverage choice and market structure to improve students’ outcomes.