Across a range of contexts, reductions in education costs and provision of subsidies can boost school participation, often dramatically. Decisions to attend school seem subject to peer effects and time-inconsistent preferences. Merit scholarships, school health programs, and information about returns to education can all cost-effectively spur school participation. However, distortions in education systems, such as weak teacher incentives and elite-oriented curricula, undermine learning in school and much of the impact of increasing existing educational spending. Pedagogical innovations designed to address these distortions (such as technology-assisted instruction, remedial education, and tracking by achievement) can raise test scores at a low cost. Merely informing parents about school conditions seems insufficient to improve teacher incentives, and evidence on merit pay is mixed, but hiring teachers locally on short-term contracts can save money and improve educational outcomes. School vouchers can cost-effectively increase both school participation and learning.


Article metrics loading...

Loading full text...

Full text loading...


Literature Cited

  1. Acemoglu D, Angrist J. 2000. How large are human capital externalities? Evidence from compulsory schooling laws NBER Macroecon. Man.
  2. Abdul Latif Jameel Poverty Action Lab 2005. Education: meeting the millenium development goals. Fight. Poverty: What Works 2005:(1):14 [Google Scholar]
  3. Abdul Latif Jameel Poverty Action Lab 2008. Solving absenteeism, raising test scores. Policy Briefcase 6:(Sept.):14 [Google Scholar]
  4. Andrabi T, Das J, Khwaja AI. 2007. Students today, teachers tomorrow? Identifying constraints on the provision of education Work. Pap., Harvard Univ.
  5. Andrabi T, Das J, Khwaja AI, Zajonc T. 2008. Do value-added estimates add value?: accounting for learning dynamics Work. Pap., Harvard Univ.
  6. Angrist J, Bettinger E, Bloom E, King E, Kremer M. 2002. Vouchers for private schooling in Colombia: evidence from a randomized natural experiment. Am. Econ. Rev. 92::153558 [Google Scholar]
  7. Angrist J, Bettinger E, Kremer M. 2006. Long-term consequences of secondary school vouchers: evidence from administrative records in Colombia. Am. Econ. Rev. 96::84762 [Google Scholar]
  8. Angrist J, Lavy V. 1999. Using Maimonides' rule to estimate the effect of class size on children's academic achievement. Q. J. Econ. 114::53376 [Google Scholar]
  9. Angrist J, Lavy V. 2002. New evidence on classroom computers and pupil learning. Econ. J. 112::73565 [Google Scholar]
  10. Attanasio O, Meghir C, Santiago A. 2005. Education choices in Mexico: using a structural model and a randomized experiment to evaluate PROGRESA Work. Pap, London Inst. Fiscal Stud., Centre Eval. Dev. Policies
  11. Banerjee A, Banerji R, Duflo E, Glennerster R, Khemani S. 2006. Can informational campaigns spark local participation and improve outcomes? A study of primary education in Uttar Pradesh, India World Bank Policy Res. Work. Pap. 3967
  12. Banerjee A, Banerji R, Duflo E, Glennerster R, Khemani S. 2009. Pitfalls of participatory programs: evidence from a randomized evaluation in education in India. Am. Econ. J. Econ. Policy. In press [Google Scholar]
  13. Banerjee A, Cole S, Duflo E, Linden L. 2007a. Remedying education: evidence from two randomized experiments in India. Q. J. Econ. 122::123564 [Google Scholar]
  14. Banerjee A, Duflo E. 2006. Addressing absence. J. Econ. Perspect. 20::11732 [Google Scholar]
  15. Banerjee A, Duflo E. 2009. The experimental approach to development economics. Annu. Rev. Econ. 1:: In press [Google Scholar]
  16. Banerjee A, Duflo E, Glennerster R. 2007b. Putting a band-aid on a corpse: incentives for nurses in the Indian public health care system. J. Eur. Econ. Assoc. 6::487500 [Google Scholar]
  17. Banerjee A, Jacob S, Kremer M, Lanjouw J, Lanjouw P. 2005. Promoting school participation in rural Rajasthan: results from some prospective trials Work. Pap., MIT
  18. Barrera-Osorio F, Bertrand M, Linden L, Perez-Calle F. 2007. Using conditional transfers in education to investigate intra family decisions: evidence from a randomized experiment Work. Pap., Univ. Chicago Graduate School Bus.
  19. Barro R. 1997. Determinants of Economic Growth. Cambridge, MA:: MIT Press
  20. Barro R. 1999. Determinants of democracy. J. Polit. Econ. 107::15883 [Google Scholar]
  21. Barro RJ, Lee J-W. 2001. International data on educational attainment: updates and implications. Oxf. Econ. Pap. 53::54163 [Google Scholar]
  22. Barrow L, Markman L, Rouse C. 2008. Technology's edge: the educational benefits of computer-aided instruction NBER Work. Pap. No. 14240
  23. Behrman JR, Sengupta P, Todd P. 2005. Progressing through PROGRESA: an impact assessment of a school subsidy experiment in rural Mexico. Econ. Dev. Cult. Change 54::23775 [Google Scholar]
  24. Berry J. 2008. Child control in education decisions: an evaluation of targeted incentives to learn in India Work. Pap., MIT
  25. Bettinger E, Kremer M, Saavedra J. 2007. Are educational vouchers only redistributive? MIT Abdul Latif Jameel Poverty Action Lab Work. Pap.
  26. Bils M, Klenow P. 2000. Does schooling cause growth?. Am. Econ. Rev. 90::116083 [Google Scholar]
  27. Bjorkman M, Svensson J. 2009. Power to the people: evidence from a randomized experiment on community-based monitoring in Uganda. Q. J. Econ. In press [Google Scholar]
  28. Bleakley H. 2007a. Disease and development: evidence from hookworm eradication in the American South. Q. J. Econ. 122::73117 [Google Scholar]
  29. Bleakley H. 2007b. Malaria eradication in the Americas: a retrospective analysis of childhood exposure Work. Pap., Univ. Chicago:
  30. Bobonis G, Finan F. 2009. Neighborhood peer effects in secondary school enrollment decisions. Rev. Econ. Stat. In press [Google Scholar]
  31. Bobonis G, Miguel E, Sharma CP. 2004. Anemia and school participation. J. Hum. Resour. 41::692721 [Google Scholar]
  32. Bruns B, Mingat A, Rakotomalala R. 2003. Achieving Universal Primary Education by 2015: A Chance for Every Child. Washington, DC:: World Bank
  33. Buddelmeyer H, Skoufias E. 2004. An evaluation of the performance of regression discontinuity design on PROGRESA World Bank Policy Res. Work. Pap. 3386, Washington, DC:
  34. Campuzano L, Dynarksi M, Agodini R, Rall K. 2009. Effectiveness of reading and mathematics software products: findings from two student cohorts NCEE 2009-4041, Natl. Center Educ. Eval. Reg. Assist., Inst. Educ. Sci., U.S. Dept. Educ., Washington, D.C:.
  35. Chaudhury N, Hammer J, Kremer M, Muralidharan K, Rogers H. 2006. Missing in action: teacher and health worker absence in developing countries. J. Econ. Perspect. 20::91116 [Google Scholar]
  36. Das J, Dercon S, Habyarimana J, Krishnan P. 2004. When can school inputs improve test scores? Policy Res. Work. Pap. 3217, World Bank, Washington, D.C:.
  37. de Laat J, Kremer M, Vermeersch C. 2008. Teacher incentives and local participation Work. Pap., Harvard Univ.
  38. Duflo E. 2001. Schooling and labor market consequences of school construction in Indonesia: evidence from an unusual policy experiment. Am. Econ. Rev. 91::795814 [Google Scholar]
  39. Duflo E. 2004. The medium run consequences of educational expansion: evidence from a large school construction program in Indonesia. J. Dev. Econ. 74::16397 [Google Scholar]
  40. Duflo E, Dupas P, Kremer M. 2007a. Peer effects, pupil-teacher ratios, and teacher incentives Work. Pap., MIT
  41. Duflo E, Dupas P, Kremer M. 2008. Peer effects and the impact of tracking: evidence from a randomized evaluation in Kenya Work. Pap., MIT
  42. Duflo E, Dupas P, Kremer M, Sinei S. 2006. Education and HIV/AIDS prevention: evidence from a randomized evaluation in Western Kenya Work. Pap., MIT
  43. Duflo E, Hanna R, Ryan S. 2007b. Monitoring works: getting teachers to come to school NBER Work. Pap. No. 11880
  44. Evans D, Kremer M, Ngatia M. 2008. The impact of distributing school uniforms on children's education in Kenya Work. Pap., Harvard Univ.
  45. Filmer D, Hasan A, Pritchett L. 2006. A millenium learning goal: measuring real progress in education Center Glob. Dev. Work. Pap. 97
  46. Filmer D, Pritchett L. 1999. What education production functions really show: a positive theory of education expenditures. Econ. Educ. Rev. 18::22339 [Google Scholar]
  47. Fiszbein A, Schady N. 2009. Conditonal cash transfers: reducing present and future poverty. World Bank Policy Res. Rep., Washington, DC: [Google Scholar]
  48. Foster A, Rosenzweig M. 1996. Technical change and human capital returns and investments: evidence from the green revolution. Am. Econ. Rev. 86::93153 [Google Scholar]
  49. Gallego F. 2006. Voucher-school competition, incentives, and outcomes: evidence from Chile Work. Pap., Pontificia Univ. Catolica Chile
  50. Gertler P. 2004. Do conditional cash transfers improve child health? Evidence from PROGRESA's control randomized experiment. Am. Econ. Rev. Pap. Proc. 94::33641 [Google Scholar]
  51. Gertler P, Boyce S. 2001. An experiment in incentive-based welfare: the impact of PROGRESA on health in Mexico Work. Pap., Univ. Calif., Berkeley:
  52. Glaeser E, LaPorta R, Lopez-de-Silanes F, Shleifer A. 2004. Do institutions cause growth?. J. Econ. Growth 9::271303 [Google Scholar]
  53. Glewwe P. 1999. The Economics of School Quality Investments in Developing Countries: An Empirical Study of Ghana. New York:: St. Martin's Press
  54. Glewwe P, Kremer M. 2005.. Schools, teachers, and education outcomes in developing countries. Handbook of Economics of Education 1 E Hanushek, F Welch 9451017. Amsterdam:: Elsevier
  55. Glewwe P, Kremer M, Moulin S. 2009a. Many children left behind? Textbooks and test scores in Kenya. Am. Econ. J. Appl. Econ. 1::11235 [Google Scholar]
  56. Glewwe P, Kremer M, Moulin S, Zitzewitz E. 2004. Retrospective vs. prospective analyses of school inputs: the case of flipcharts in Kenya. J. Dev. Econ. 74::25168 [Google Scholar]
  57. Glewwe P, Holla A, Kremer M. 2009b.. Teacher incentives in the developing world. In Performance Incentives: Their Growing Impact on American K-12 Education M Springer Washington, DC:: Brookings Inst. Press
  58. Glewwe P, Ilias N, Kremer M. 2008. Teacher incentives Work. Pap., Harvard Univ.
  59. Glewwe P, Olinto P. 2004. Evaluating the impact of conditional cash transfers on schooling: an experimental analysis of Honduras PRAF program Final Rep. USAID, Int. Food Policy Res. Inst.
  60. Gonzales PJCG, Partelow L, Pahlke E, Jocelyn L, Kastberg D, Williams T. 2004. Highlights from the Trends in International Mathematics and Science Study (TIMSS) 2003. NCES 2005–005, U.S. Dept. Educ., Natl. Center Educ. Stat., Washington, D.C.: [Google Scholar]
  61. Gordon R, Kane TJ, Staiger DO. 2006. Identifying effective teachers using performance on the job Hamilton Project Discuss. Pap. 2006-01, Brookings Inst:.
  62. Greaney V, Khandker SR, Alam M. 1999. Bangladesh: Assessing Basic Learning Skills. Dhaka, Bangladesh:: Univ. Press
  63. Greene JP, Peterson PE, Du J. 1997. Effectiveness of school choice: the Milwaukee experiment Harvard Univ. Prog. Educ. Policy Gov., Cambridge, Mass:.
  64. Hannaway J. 1992. Higher order thinking, job design, and incentives: an analysis and proposal. Am. Educ. Res. J. 29::321 [Google Scholar]
  65. Hanushek EA. 1995. Interpreting recent research on schooling in developing countries. World Bank Res. Obs. 10::22746 [Google Scholar]
  66. Hanushek EA. 2002. Evidence, politics, and the class size debate. See Mishel & Rothstein 2002, pp. 3966 [Google Scholar]
  67. Hanushek EA, Woessmann L. 2008. The role of cognitive skills in economic development. J. Econ. Lit. 46::60768 [Google Scholar]
  68. Harbison RW, Hanushek EA. 1992. Educational Performance of the Poor: Lessons from Rural Northeast Brazil. New York:: Oxford Univ. Press
  69. He F, Linden L, MacLeod M. 2007. Helping teach what teachers don't know: an assessment of the Pratham English language program Work. Pap., Columbia Univ.
  70. Holmstrom B, Milgrom P. 1991. Multi-task principal-agent analysis: incentive contracts, asset ownership, and job design. J. Law Econ. Organ. 7::2452 [Google Scholar]
  71. Hoxby C. 2000. Does competition among public schools benefit students and tax payers?. Am. Econ. Rev. 90::120938 [Google Scholar]
  72. Hsieh C-T, Urquiola M. 2006. The effects of generalized school choice on achievement and stratification: evidence from Chile's school voucher program. J. Public Econ. 90::1477503 [Google Scholar]
  73. James E. 1986a.. Benefits and costs of privatized public services: lessons from the Dutch educational system. In Private Education: Studies in Choice and Public Policy D Levy 11338. New York:: Oxford Univ. Press
  74. James E. 1986b. The private nonprofit provision of education: a theoretical model and application to Japan. J. Comp. Econ. 10::25576 [Google Scholar]
  75. Jamison D, Searle B, Galda K, Heyneman S. 1981. Improving elementary mathematics education in Nicaragua: an experimental study of the impact of textbooks and radio on achievement. J. Educ. Psychol. 73::55667 [Google Scholar]
  76. Jensen R. 2007. The perceived returns to education and the demand for schooling Work. Pap., Harvard Univ.
  77. Jorgenson DW, Fraumeni BM. 1989.. The accumulation of human and nonhuman capital, 1948–1984. In The Measurement of Saving, Investment, and Wealth RE Lipsey, HS Tice 22786. Chicago:: Univ. Chicago Press
  78. Kirschner PA, Sweller J, Clark RE. 2006. Why minimal guidance during instruction does not work: an analysis of the failure of constructivist, discovery, problem-based, experiential, and inquiry-based teaching. Educ. Psychol. 41::7586 [Google Scholar]
  79. Kouskalis E. 2008. Does not compute: the introduction of new technologies to South African and Namibian classrooms Undergraduate thesis. Harvard Univ.
  80. Kremer M. 2003. Randomized evaluation of educational programs in developing countries: some lessons. Am. Econ. Rev. Pap. Proc. 93:(2):1026 [Google Scholar]
  81. Kremer M, Chen D. 2001. Interim report on a teacher incentive program in Kenya Work. Pap., Harvard Univ.
  82. Kremer M, Holla A. 2008. Increasing the quantity and quality of human capital investment in the developing world World Bank Comm. Growth Dev. Work. Pap.
  83. Kremer M, Holla A. 2009.. Pricing and access: lessons from randomized evaluations in education and health. In What Works in Development: Thinking Big and Thinking Small W Easterly, J Cohen Washington, D.C.:: Brookings Inst.
  84. Kremer M, Miguel E, Thornton R. 2009. Incentives to learn. Rev. Econ. Stat. In press
  85. Kremer M, Moulin S, Namunyu R. 2003. Decentralization: a cautionary tale Work. Pap., Harvard Univ.
  86. Kremer M, Muralidharan K. 2008.. Public and private schools in rural India. In School Choice International P Peterson, R Chakrabarti 91110. Cambridge, MA:: MIT Press
  87. Kremer M, Sarychev A. 2008. Why do governments operate schools? Work. Pap., London School Econ.
  88. Kremer M, Vermeersch C. 2005. School meals, educational achievement and school competition: evidence from a randomized evaluation World Bank Policy Res. Work. Pap. 3523
  89. Krueger A. 1999. Experimental estimates of education production functions. Q. J. Econ. 114::497532 [Google Scholar]
  90. Krueger A, Lindahl M. 2001. Education for growth: why and for whom. J. Econ. Lit. 39::110136 [Google Scholar]
  91. Krueger A, Whitmore DM. 2001. The effect of attending a small class in the early grades on the college-test taking and middle school test results: evidence from Project STAR. Econ. J. 111::128 [Google Scholar]
  92. Krueger AB. 2002. Understanding the magnitude and effect of class size on student achievement. See Michel & Rothstein 2002, pp. 736 [Google Scholar]
  93. Krueger AB. 2002. A response to Eric Hanushek's “Evidence, politics, and the class size debate.”. See Michel & Rothstein 2002, pp. 7388 [Google Scholar]
  94. Krueger A, Zhu P. 2003. Another look at the New York City school voucher experiment NBER Work. Pap. 9418
  95. Lalive R, Cattaneo A. 2006. Social interactions and schooling decisions IZA Discuss. Pap. 2250, Inst. Study Labor, IZA:
  96. Levy S. 2006. Progress Against Poverty: Sustaining Mexico's Progresa-Oportunidades Program. Washington, DC:: Brookings Inst.
  97. Lockheed M, Verspoor A. 1991. Improving Primary Education in Developing Countries. New York:: Oxford Univ. Press
  98. Lockheed ME, Hanushek E. 1988. Improving educational efficiency in developing countries: What do we know?. Compare 18::2137 [Google Scholar]
  99. Lucas R. 1988. On the mechanics of economic development. J. Monetary Econ. 22::342 [Google Scholar]
  100. Maluccio JA, Flores R. 2005. Impact Evaluation of a Conditional Cash Transfer Program: The Nicaraguan Red de Protección Social. Washington, D.C.:: Int. Food Policy Res. Inst.
  101. Miguel E, Kremer M. 2004. Worms: identifying impacts on education and health in the presence of treatment externalities. Econometrica 72::159217 [Google Scholar]
  102. Mishel L, Rothstein R. , eds. 2002. The Class Size Debate. Washington, DC:: Econ. Policy Res.
  103. Muralidharan K, Sundararaman V. 2008a. Teacher performance pay: experimental evidence from India Work. Pap., Univ. Calif, San Diego:
  104. Muralidharan K, Sundararaman V. 2008b. Contract teachers: experimental evidence from India Work. Pap., Univ. Calif., San Diego:
  105. Nguyen T. 2008. Information, role models, and perceived returns to education: experimental evidence from Madagascar Work. Pap., MIT
  106. Powell CA, Walker SP, Chang SM, Grantham-McGregor SM. 1998. Nutrition and education: a randomized trial of the effects of breakfast in rural primary school children. Am. J. Clin. Nutr. 68::87379 [Google Scholar]
  107. Pritchett L. 2001. Where has all the education gone?. World Bank Econ. Rev. 15:(3):36791 [Google Scholar]
  108. Pritchett L. 2009.. The policy irrelevance of the economics of education: Is “normative as positive” just useless, or is it worse? In What Works in Development: Thinking Big and Thinking Small W Easterly, J Cohen Brookings Inst.
  109. PROBE Team 1999. Public Report on Basic Education in India. New Delhi:: Oxford Univ. Press
  110. Psacharopoulos G, Patrinos HA. 2004. Returns to investment in education: a further update. Educ. Econ. 12::11134 [Google Scholar]
  111. Rice JK. 2002. Making the evidence matter: implications of the class size research debate for policy makers. See Mishel & Rothstein 2002, pp. 9095 [Google Scholar]
  112. Rothstein, Jesse 2008. Teacher quality in educational production: tracking, decay, and student achievement Work. Pap., Princeton Univ.
  113. Rouse CE. 1998. Private school vouchers and student achievement: an evaluation of the Milwaukee parental choice program. Q. J. Econ. 13::553602 [Google Scholar]
  114. Schady N, Araujo MC. 2006. Cash transfers, conditions, school enrollment, and child work: evidence from a randomized experiment in Ecuador World Bank Policy Res. Work. Pap. 3930
  115. Schultz P. 1997.. Demand for children in low income countries. In Handbook of Population and Family Economics M Rosenzweig, O. Stark 349430. Amsterdam: North Holland
  116. Schultz TP. 2002. Why governments should invest more to educate girls. World Dev. 30::20725 [Google Scholar]
  117. Schultz TP. 2004. School subsidies for the poor: evaluating the Mexican PROGRESA poverty program. J. Dev. Econ. 74::199250 [Google Scholar]
  118. Shastry GK, Linden L. 2007. Identifying agent discretion: exaggerating student attendance in response to a conditional school nutrition program Work. Pap., Columbia Univ.
  119. Strauss J, Thomas D. 1995.. Human resources. In Handbook of Development Economics: Vol. 3 J Behrman, TN Srinivasan 18832023. Amsterdam: North Holland:
  120. Todd P, Wolpin KI. 2006. Using experimental data to validate a dynamic behavioral model of child schooling: assessing the impact of a school subsidy program in Mexico. Am. Econ. Rev. 96::1384417 [Google Scholar]
  121. Tooley J. 2004. Private education and education for all. Econ. Aff. 24:(4):47 [Google Scholar]
  122. Umansky I, Vegas E. 2007. Inside decentralization: how three Central American school-based management reforms affect student learning through teacher incentives. World Bank Res. Obs. 22::197215 [Google Scholar]
  123. UNESCO 2005. Education for All Global Monitoring Report: The Quality Imperative. Paris:: UNESCO
  124. UNESCO 2006. Education for All Global Monitoring Report: Literacy for Life. Paris:: UNESCO
  125. Urquiola M, Verhoogen E. 2008. Class-size caps, sorting, and regression: discontinuity design. Am. Econ. Rev 99::179215 [Google Scholar]
  126. Vegas E, de Laat J. 2005. Do differences in teacher contracts affect student performance? World Dev. Rep. 2004 Backgr. Pap.
  127. WHO 2005. Deworming for Health and Development: Report of the Third Global Meeting of the Partners for Parasite Control. Geneva:: WHO
  128. Witte JF. 1995. Three critical factors in the school choice debate. Soc. Sci. Q. 76::5026 [Google Scholar]
  129. World Bank 2004. World Development Report 2004: Making Services Work for Poor People. Washington, DC:: World Bank
  130. World Bank 2006. World Development Indicators 2006. Washington, DC:: World Bank
  131. Zhang Y, Postlethwaite TN, Grisay A. , eds. 2008. A View Inside Primary Schools: A World Education Indicators Cross-National Study. Montreal:: UNESCO

Data & Media loading...

  • Article Type: Review Article
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error