Association for Public Policy Analysis & Management

In this paper, we present the first estimates of the economic effects of colleges in low-income countries. Using multiple datasets, and a combination of event study and difference-in-differences research designs, we study the effects of elite public colleges on primary and secondary schooling markets in India. We find that elite public colleges led to an increase in educational attainment, driven by children staying in school longer. These gains in attainment correspond with a larger role played by private schools as more for-profit schools enter regions with new elite colleges, and students switch from public to private schools. We provide suggestive evidence that these effects on schooling markets are driven by focal investments in water and electricity services, which reduce setup costs for private schools, and consequently, travel costs for school-age children.