The Value of Private Schools: Evidence from Pakistan

Using unique data from Pakistan, we estimate a model of demand for differentiated products in 112 rural education markets with significant choice among public and private schools. Families are willing to pay substantially for reductions in distance to school, but in contrast, price elasticities are low. Using the demand estimates, we show that the existence of a low fee private school market is of great value for households in our sample, reaching 2 percent to 7 percent of annual per capita expenditure for those choosing private schools.