Can market solutions provide cost-effective alternatives to failing public service delivery systems in developing countries? Existing studies from the U.S., Latin America and Asia provide little evidence that private schools lead to large gains in academic performance relative to public schools. Using data from Kenya - a poor country with weak public institutions - we find a large effect of private schooling on test scores, equivalent to one full standard deviation. This finding is robust to endogenous sorting of more able pupils into private schools. The magnitude of the effect greatly exceeds the most cost-effective interventions to increase public school performance documented in the literature. Combining household survey and administrative data, we estimate median expenditure per pupil is just $41 per annum in the private sector, compared to $84 in government primary schools.
Bold, T.; Kimenyi, M.; Mwabu, G.; Sandefur, J. The high return to low-cost private schooling in a developing country (IGC Working Paper). International Growth Centre (IGC), London, UK (2012) 14 pp.