Preschool%20Education%20in%20Brazil%3A%20Does%20Public%20Supply%20Crowd%20Out%20Private%20Enrollment%3F

Working Papers

Preschool Education in Brazil: Does Public Supply Crowd Out Private Enrollment?


CODE: IDB-WP-463
AUTHOR(s): Bastos, Paulo , Straume, Odd Rune
PUBLISHED: November 2013
LANGUAGE: English
RELATED TOPICS: Finance
DOWNLOAD FILE IN: English

Abstract:

This paper examines whether an expansion in the supply of public preschool crowds out private enrollment, using rich data for municipalities in Brazil from 2000-2006, where federal transfers to local governments change discontinuously with given population thresholds. Results from a regression-discontinuity design reveal that larger federal transfers lead to a significant expansion of local public preschool services, but show no effects on the quantity or quality of private provision. These findings are consistent with a theory in which households differ in willingness to pay for preschool services, and private suppliers optimally adjust prices in response to an expansion of lower-quality, free-of-charge public supply.

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