School Construction Case Study

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This paper titled Schooling and Labour Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment was published in the American Economic Review issue of September 2001 and is one of Esther Duflo’s first papers and received wide attention. It studies the largest school construction program in record, undertaken by the Indonesian government between the years 1973 and 1978. It led to the construction of 61,000 primary schools affording one primary school per 1000 children. The program led to an average increase of .12 to .19 years of education as well as an increase in wages of 1.5 to 2.7 percent. The economic returns to education ranges from 6.8 to 10.6 percent.

I will highlight the key distinguishing features of the paper and outline its contributions to the field of evaluation in the design and scope section. The key methodologies will be discussed with attempts to draw comparison with contemporary practices. I will conclude by outlining some of the policy implications derived from the findings of the paper.

Design and Scope
• Quasi Experiment: This study creatively exploits a dramatic policy shift in Indonesia to study the effect of building schools on education and earnings. While it isn’t an experiment, the magnitude and design of the intervention creates conditions that qualify as a semi-experiment. The selection criteria of the locations for school construction based on enrolment rates create a natural comparison group. The use of quasi experiments finds mention in a 2004 paper as a “newer” research tool in the economics of education that has been used in studies on investments in education and infrastructure ( Patrino and Psachropoulus, 2004)

• Large scale Intervention: The magna...

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...tion because of outward migration of individuals educated in the local schools, decentralisation of school finances could lead to a decline in the public financing of education (Duflo 2004).

Conclusion

While classical empirical question of the causal effect of schooling on wages has been a key topic in labour economics, Esther Duflo in this paper has examined closely the challenge that arises when educational attainment is not exogenously allocated across individuals as family concerns, political processes act as influencers. Esther’s skill in strongly attributing the results of educational attainment to school construction through the use of specific estimators remains one of the successes of the paper. In conclusion, this paper is representative of the intellectual prowess and rigour that Esther Duflo has since contributed to the field of development economics.

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