Syndicate content

Free Schooling is Not Really Free for the Poor: Corruption in Education and Inequality

Forhad Shilpi's picture

There is a broad consensus among the academics and policy makers that education is one of the most important policy instruments in promoting inclusive economic growth. For example, Stiglitz (2012, P. 275) notes "(O)pportunity is shaped, more than anything else, by access to education", and Rajan (2010, P.184) argues "..the best way of reducing unnecessary income inequality is to reduce the inequality in access to better human capital". A focus on building the human capital of the poor seems triply desirable: (i) it is the only asset that every poor person 'owns'; (ii) human capital is inalienable and thus less susceptible to expropriation, an important advantage in many developing countries suffering from a lack of rule of law; and (iii) returns to education are expected to increase over time with globalization because of skill-biased technological change. Recognizing this unique role of education, a large number of developing countries over the last few decades invested heavily in policies such as free universal schooling (at least at the primary level), scholarships for girls, free books, and mid-day meals. The basic assumption is that such policies would lessen the burden on poor families for educating their children, and thus help reduce educational and income inequality and improve the economic mobility of the children from poor families. However, this widely accepted policy view does not take into account the effects of corruption in schools in developing countries.

Corruption is endemic in schools in developing countries.  In Bangladesh, about half of the households reported paying some form of bribe for children's education. A study on seven African countries finds that 44 percent of parents had to pay illegal fees to send their children to school (World Bank (2010)). According to a New York Times report, bribery is rife not only in school admissions in China, even the front row seats in the classroom are up for sale. A recent Washington Post report also highlighted the corruption in admission into reputed public schools in China. The Global Corruption Report (2013) notes that "corruption acts as an added tax on the poor, who are frequently plagued by demands for bribes, particularly when they are trying to access basic services such as education."

In contrast to the common belief that corruption hurts poor more, the standard model of corruption in fact predicts that the rich are more likely to pay bribes, reflecting higher ability to pay. This prediction is driven by the dubious assumption that the probability and severity of punishment for bribe-taking does not vary across households in developing countries. In a developing country, the rule of law is lacking and the poor have little bargaining power; thus the enforcement of law is frequently selective and biased against the poor. In a recent paper titled "Admission is Free only if Your Dad is Rich: Distributional Effects of Corruption in Schools in Developing Countries", we construct a more realistic model, where the probability of punishment for bribe taking by a teacher depends on the household's economic status and show that bribes are likely to be regressive. The predictions of the model are then tested using household level survey data collected by Transparency International of Bangladesh. We use ten year average rainfall variations across villages to correct for the endogeneity of household income in rural areas. We find that corruption in schools in Bangladesh is doubly regressive: the poor are more likely to pay bribes (conservative estimate of income elasticity is -0.73); and among the bribe payers, the poor pay a higher share of their income. The Instrumental Variable results are in contrast to the Ordinary Least Squares (OLS) estimate showing a positive effect of household income on the amount of bribes paid for education. The evidence thus indicates that OLS regressions may yield spurious progressivity in bribes. At the end of the day "free schooling" is free only for the rich and corruption makes the playing field skewed against the poor.

References

New York Times, "A Chinese Education, for a Price", November 21, 2012.

Rajan, Raghuram (2010), Fault Lines, Princeton University Press.

Stiglitz, J (2012), The Price of Inequality, W. W. Norton and Company.

Transparency International (2013), "Global Corruption Report: Education", Routledge, New York.

Washington Post, "In China, parents bribe to get students into top schools, despite campaign against corruption", October 7, 2013

World Bank (2010), Silent and Lethal: How Quiet Corruption Undermines Africa's Development Effort, IBRD/ World Bank, Washington DC.

Comments

Submitted by Roger Grawe on

Interesting finding and an important line of enquiry; but doesn't alter the potential value of introducing free education unless bribes increase in line with the reduction in tuition and negate the enrollment effect from the reduction or elimination of tuition. The generality of the title is eye-catching but the results are also likely to be very dependent on the local context. Even if there were no bribes it has long been well-known that the informal costs associated with children attending school (uniforms, books and supplies, foregone household labor, etc) will disproportionately affect the poor; but the emphasis that this research brings to improving governance is certainly welcome.

Submitted by uncorrelated on

I have read your paper fascinatingly, and I have a question. What would happened to children if their parents didn't bribe their teacher?

In your model, children could be disallowed to enroll in school by teachers though they are mandated to go primary school. I wonder whether teachers can do that. Have any teacher done such kind of thing ever?

Thank you in advance for your answer.

To answer whether teachers can deny admission to school while primary schooling is supposed to be compulsory: (i) If teachers cannot deny admission, then our model suggests that the relationship between propensity to pay bribe and income will be non-linear: we should observe propensity to pay bribe to be zero at the bottom of the income distribution, then increase with an increase in income and finally decline with income. We did explore this in our data using non-parametric estimation and found no evidence of non-linear relationship. (ii) Evidence from Household Expenditure survey 2010 shows that there is a significant difference in primary enrolment rates between poor (bottom 30 percent of per capita expenditure distribution) and non-poor households: the enrolment rate is 72 percent for children coming from the poor households relative to 80 percent for children from non-poor households. In any case, enrolment has not reached close to 100 percent at the primary level yet. To conclude, we remain convinced that threat of not admitting a child to school is real. Please also see the following paper in the Global Corruption Report (2013) “Free or fee: corruption in primary school admissions” by Peter Hyll Larsen.

Submitted by uncorrelated on

Thank you for your reply.

I'll review your model about the shape of the relationship between propensity to pay bribe and income, and read the Global Corruption Report (2013).

By the way, I'd like to know a case evidence in Bangladesh because the primary enrollment rates could be lowered by child labor caused by poor or unappreciation of parents. Some case evidence would reinforce your study.

I appreciate your kindness.

Add new comment