Contracting Out Schools at Scale: Evidence from Pakistan

Can governments contract out the management of schools to private operators at scale? This paper estimates the effect of a school reform in Punjab, Pakistan, in which 4,276 poorly performing public primary schools (around 10 percent of the total) were contracted out to private operators in a single school year. These schools remain free to students and the private operator receives a perstudent subsidy equivalent to less than half of spending in government schools. Using a difference-in-difference framework we estimate that enrolment in converted schools increased by over 60 percent. Converted schools see a slight decline in overall average test scores, but this may be a composition effect rather than a treatment effect. Schools with the same number or fewer students as in the previous year saw no change in average test scores.