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Joint PAM, Development & Dyson Workshop - Michael Kremer

Thu, 09/07/2017 - 11:40am

Michael Kremer

Harvard University

401 Warren Hall

"Can Educational Voucher Programs Pay for Themselves?"

Abstract: In the 1990's Colombia awarded private secondary school scholarships to socially disadvantaged students via lotteries.  Using administrative data up to twenty years after the scholarship lottery, we find that lottery winners are less likely to repeat grades, more likely to graduate from secondary school on time or ever, and more likely to start and complete tertiary education. Tertiary education impacts are strongest among students who initially applied to attend vocational secondary schools. Scholarships reduce teen fertility although there is no significant effect on overall fertility at age 30. Social security data suggests that twenty years after the scholarship lottery, average annual formal earnings for lottery winners near age 33 are 8 percent greater than those for losers. Formal-sector earnings effects are entirely driven by vocational school applicants, among whom lottery winners earn 17 percent more than losers. Lottery winners, particularly those who applied to vocational schools have greater access to formal consumer credit, better credit scores, and are more likely to have taken out car loans, a sign of entry to the middle class. The expected net present value of increased net tax receipts due to the program likely exceeds its fiscal cost, implying that the program was welfare improving unless net externalities were large and negative.

Event Categories: Development