Private School Entry, Sorting, and Performance of Public Schools: Evidence from Pakistan

Public schools play a key role in the education of primary school children. Given the growing importance of private school competition in education markets across the developing world, what is the response in the public education sector? I use a rich longitudinal dataset of 112 schooling markets in rural Pakistan to provide empirical evidence of parental responses to private school expansion and the plausible effects on the education of students in public schools. Parents from wealthier backgrounds and of boys are more likely to switch their children to private schools, particularly in lower primary school (grades 1 and 2). Using data on students in grades 3 to 5, I show that although richer students tend to exit public schools, academic performance remains constant. I explore whether the consequences of private school entry on public education appear only after the youngest cohorts of students progress through school. I show that there is no significant negative impact on the performance of public schools in the long term. The findings in this paper highlight the dynamics in the decision to switch schools and contribute to our understanding of potential complementarities between public and private school systems.