The Fiscal Cost of Weak Governance
The relative return to input-augmentation versus inefficiency-reduction strategies for improving education system performance is a key open question for education policy in low-income countries. Using a new nationally-representative panel dataset of schools across 1297 villages in India, this paper shows that the large investments over the past decade have led to substantial improvements in input-based measures of school quality, but only a modest reduction in inefficiency as measured by teacher absence. In the data, 23.6 percent of teachers were absent during unannounced visits with an associated fiscal cost of $1.5 billion/year. There are two robust correlations in the nationally-representative panel data that corroborate findings from smaller-scale experiments. First, reductions in student-teacher ratios are correlated with increased teacher absence. Second, increases in the frequency of school monitoring are strongly correlated with lower teacher absence. Simulations using these results suggest that investing in better governance by increasing the frequency of monitoring could be over ten times more cost effective at increasing teacher-student contact time (net of teacher absence) than hiring more teachers. Thus, at current margins, policies that decrease the inefficiency of public spending in India are likely to yield substantially higher returns than those that augment inputs.
| Summary: | The relative return to
input-augmentation versus inefficiency-reduction strategies
for improving education system performance is a key open
question for education policy in low-income countries. Using
a new nationally-representative panel dataset of schools
across 1297 villages in India, this paper shows that the
large investments over the past decade have led to
substantial improvements in input-based measures of school
quality, but only a modest reduction in inefficiency as
measured by teacher absence. In the data, 23.6 percent of
teachers were absent during unannounced visits with an
associated fiscal cost of $1.5 billion/year. There are two
robust correlations in the nationally-representative panel
data that corroborate findings from smaller-scale
experiments. First, reductions in student-teacher ratios are
correlated with increased teacher absence. Second, increases
in the frequency of school monitoring are strongly
correlated with lower teacher absence. Simulations using
these results suggest that investing in better governance by
increasing the frequency of monitoring could be over ten
times more cost effective at increasing teacher-student
contact time (net of teacher absence) than hiring more
teachers. Thus, at current margins, policies that decrease
the inefficiency of public spending in India are likely to
yield substantially higher returns than those that augment inputs. |
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