Preschool Education in Brazil: Does Public Supply Crowd Out Private Enrollment?
29 Pages Posted: 15 Dec 2013
Date Written: November 2013
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.
JEL Classification: D12, I21, I28, L21, O15
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