Asim Ijaz Khwaja

A dime a day : the possibilities and limits of private schooling in Pakistan

This paper looks at the private schooling sector in Pakistan, a country that is seriously behind schedule in achieving the Millennium Development Goals. Using new data, the authors document the phenomenal rise of the private sector in Pakistan and show that an increasing segment of children enrolled in private schools are from rural areas and from middle-class and poorer families. The key element in their rise is their low fees-the average fee of a rural private school in Pakistan is less than a dime a day (Rs.6). They hire predominantly local, female, and moderately educated teachers who have limited alternative opportunities outside the village. Hiring these teachers at low cost allows the savings to be passed on to parents through low fees. This mechanism-the need to hire teachers with a certain demographic profile so that salary costs are minimized-defines the possibility of private schools: where they arise, fees are low. It also defines their limits. Private schools are horizontally constrained in that they arise in villages where there is a pool of secondary educated women. They are also vertically constrained in that they are unlikely to cater to the secondary levels in rural areas, at least until there is an increase in the supply of potential teachers with the required skills and educational levels.

IS INCREASING COMMUNITY PARTICIPATION ALWAYS A GOOD THING

This paper considers the impact of community participation on outcomes of development projects. It first offers a theoretical framework for participation by using the property rights literature to model how participation in an activity, in addition to involving information exchange, also results in greater influence in the activity. The model predicts that community participation may not always be desirable. The paper then uses primary data on development projects in Northern Pakistan to provide empirical support for this prediction. It shows that while community participation improves project outcomes in nontechnical decisions, increasing community participation in technical decisions actually leads to worse project outcomes. (JEL: D23, D78, H40, O12, O20) Copyright (c) 2004 The European Economic Association.

Report Cards: The Impact of Providing School and Child Test Scores on Educational Markets

This paper studies study the impact of providing school and child test scores on subsequent test scores, prices, and enrollment in markets with multiple public and private providers. A randomly selected half of the sample villages (markets) received report cards. This increased test scores by 0.11 standard deviations, decreased private school fees by 17 percent, and increased primary enrollment by 4.5 percent. Heterogeneity in the treatment impact by initial school quality is consistent with canonical models of asymmetric information. Information provision facilitates better comparisons across providers, improves market efficiency and raises child welfare through higher test scores, higher enrollment, and lower fees.

Can Good Projects Succeed in Bad Communities? Collective Action in the Himalayas

This paper examines, theoretically and empirically, the determinants of collective success in the maintenance of infrastructure projects. The empirical analysis employs primary data collected by the author on 132 community-maintained infrastructure projects in Northern Pakistan. Determinants are grouped into community-specific and project-specific factors, the latter identified using community fixed effects. The analysis shows that community-specific factors are important: Socially heterogeneous communities have poorly maintained projects and community inequality has a U-shaped relationship with maintenance. Project leaders are associated with higher maintenance, with attributes of hereditary leader households used as instruments for leader presence. However, the results suggest that the effects of project-specific factors are even larger. Specifically, complex projects are poorly maintained and inequality in project returns has a Ushaped relationship with maintenance. Increased community participation in project decisions has a positive effect on maintenance for non-technical decisions but a negative effect for technical decisions. Projects initiated by non-governmental organizations are better maintained than local government projects, as are projects made as extensions of old projects rather than anew. The findings are consistent with the theory and suggest that adverse community-specific factors, such as a lack of social capital, can be more than compensated for by better project design.

Decentralization in Pakistan: Context, Content and Causes

This paper provides a description of the recent decentralization reforms in Pakistan under General Musharraf. In the process, we hope to not only highlight major aspects of this reform, but also to analyze the evolution of this reform in historical context in order to better understand the potential causes behind the current decentralization. Analyzing the evolution of local government reforms in Pakistan is interesting because each of the reform experiments has been instituted at the behest of a non-representative centre using a ‘top down’ approach. The Pakistani experience shows that each of the reform experiments is a complementary change to a wider constitutional reengineering strategy devised to further centralization of political power in the hands of the non-representative centre. We argue here that the design of the local government reforms in these contexts becomes endogenous to the centralization objectives of the non-representative centre. It is hoped that analyzing the Pakistani experience will help shed light on the positive political economy question of why non-representative regimes have been willing proponents of decentralization to the local level.

What Did You Do All Day? Maternal Education and Child Outcomes

Does maternal education have an impact on children’s educational outcomes even at the very low levels found in many developing countries? We use instrumental variables analysis to address this issue in Pakistan. We find that children of mothers with some education spend 72 more minutes per day on educational activities at home. Mothers with some education also spend more time helping their children with school work. In the subset that have test scores available, children whose mothers have some education have higher scores by 0.23–0.35 standard deviations. We do not find support for channels through which education affects bargaining power within the household.

Upping the ante: the equilibrium effects of unconditional grants to private schools

This paper tests for financial constraints as a market failure in education in a low-income country. In an experimental setup, unconditional cash grants are allocated to one private school or all private schools in a village. Enrollment increases in both treatments, accompanied by infrastructure investments. However, test scores and fees only increase in the setting of all private schools along with higher teacher wages. This differential impact follows from a canonical oligopoly model with capacity constraints and endogenous quality: greater financial saturation crowds-in quality investments. The findings of higher social surplus in the setting of all private schools, but greater private returns in the setting of one private school underscore the importance of leveraging market structure in designing educational subsidies.

Delivering education: a pragmatic framework for improving education in low-income countries

Even as primary-school enrollments have increased in most low-income countries, levels of learning remain low and highly unequal. Responding to greater parental demand for quality, low-cost private schools have emerged as one of the fastest growing schooling options, challenging the monopoly of state-provided education and broadening the set of educational providers. Historically, the rise of private schooling is always deeply intertwined with debates around who chooses what schooling is about and who represents the interests of children. This time is no different. But rather than first resolve the question of how child welfare is to be adjudicated, this paper argues instead for a `pragmatic framework’. In this pragmatic framework, policy takes into account the full schooling environment—which includes public, private and other types of providers—and is actively concerned with first alleviating constraints that prohibit parents and schools from fulfilling their own stated objectives. Using policy actionable experiments as examples, this paper shows that the pragmatic approach can lead to better schooling for children. Alleviating constraints by providing better information, better access to finance or greater access to skilled teachers brings more children into school and increases test-scores in language and mathematics. These areas of improvement are very similar to those where there is already a broad societal consensus that improvement is required.

Making Moves Matter: Experimental Evidence on Incentivizing Bureaucrats Through Performance-Based Transfers

Postings are often used by bureaucracies, especially in emerging economies, in an attempt to reward or punish their staff. Yet we know little about whether, and how, this type of mechanism can help incentivize performance. Using postings to induce performance is challenging, as heterogeneity in preferences over which postings are desirable non-trivially impacts the effectiveness of such schemes. We propose and examine the properties of a mechanism, which we term a performance-ranked serial dictatorship, in which individuals sequentially choose their desired location, with their rank in the sequence based on their performance. We then evaluate the effectiveness of this mechanism using a two-year field experiment with over 500 property tax inspectors in Punjab, Pakistan. We first show that the mechanism is effective: being randomized into the performance-ranked serial dictatorship leads inspectors to increase the growth rate of tax revenue by between 44 and 80 percent. We then use our model, combined with preferences collected at baseline from all tax inspectors, to characterize which inspectors face the highest marginal incentives under the scheme. We find empirically that these inspectors do in fact increase performance more under this mechanism. We estimate the cost from disruption caused by transfers to be small, but show that applying the scheme too frequently can reduce performance. On net the results suggest that bureaucracies have tremendous potential to improve performance by periodically using postings as an incentive, particularly when preferences over locations have a substantial common component.

A Psychology-Enabled Solution to Small- and Medium-Sized Enterprise Finance

Industrial and Organizational Psychology has developed tools to solve a similar problem: personnel selection. Big companies need to select among a large number of individuals applying for a job. This has to be done with relatively low transaction costs, and there is little information available to separate the good candidates from the bad candidates—a very similar problem to that facing the banks. Psychologists have developed psychometric tools to measure things like personality, motivation, outlook, and intelligence, which are related to subsequent job performance. These tools have been shown to work even better than other methods like interviews and background checks, and are widely used. What if they could be applied to the selection of small businesses to lend to? We review a variety of academic studies that have already used these tools to evaluate entrepreneurs and distinguish entrepreneurs from non-entrepreneurs and good entrepreneurs from bad entrepreneurs. The studies center on three main themes: personality, intelligence, and honesty. The first two relate to the ability to repay a loan, in that they could identify entrepreneurs who are more likely to successfully grow their business and its cash flows. Honesty relates to the willingness to repay a loan, as banks need to worry not just if the entrepreneur has enough money to repay but if they then decide to repay or else take the money and run. These studies provide initial insight into what particular characteristics and abilities could be systematically related to credit risk, and used for future lending to small business owners who would traditionally be rejected by banks due to a lack of information.