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Shanmugam ’23: Building more schools alone won’t increase enrollment in low-income countries

In the world’s poorest countries, children who don’t attend school often have no choice but to become breadwinners or even get married before adulthood. For those who can stay in school, on the other hand, education is transformative. Just one additional year of schooling can boost future earnings by nine percent. And babies born to literate mothers are 50 percent more likely to live to the age of five. Well aware that children who attend school live healthier, richer lives, governments in the developing world have long sought to expand access to quality education. But millions of families are choosing to keep their children at home; policymakers’ long trusted strategies are growing stale. Instead of investing blindly in the supply of education — schools, teachers, books, etc. — authorities need to ask why demand for education has leveled off.

Abhijit Banerjee and Esther Duflo explain in Poor Economics that most policy makers view the supply of education as key in giving children the chance to learn. Indeed, this mentality has guided post-colonial governments in low-income countries. Tanzania, for example, made primary school free in 2001; Kenya followed in 2003. Duflo and Banerjee note that 95 percent of Indian children today live within half a mile from a school. At first glance, it seems as though supplying more education to expand enrollment worked: The number of unenrolled primary school-age children decreased from 94 million to 72 million between 2002 and 2005-2006.

But growth in enrollment has been more muted in recent years. Since 2007, the percent of primary school age children not attending school has remained stubbornly between 8 and 9 percent. Sixty million children thus miss out on the cognitive, financial and social growth that grade school often ensures. At the secondary school level, global enrollment has been stuck at around 75 percent since 2013.

NGOs and activists are still trying to explain this stagnation. In the 2000s, education, long inaccessible to vast swathes of humanity, became more accessible than ever before; droves of first-generation students stepped into primary school classrooms. But as the decade came to a close, the effects of supply investment seemed to drop off. Despite being granted public education for the first time, millions of families weren’t taking advantage of their new opportunities. 

In essence, supply investment was most effective when there wasn’t much supply to begin with – when tuition free schools in the developing world were hard to come by. Additional investment was much less effective once the infrastructure for universal public education was put into place. In other words, there are diminishing returns to investing in the supply of education. 

In the early stages of development, barriers to education are largely physical. Students often live too far from schools for attendance to be worth it. And in many rural areas, limited capacity makes universal enrollment impossible. Children in Indonesia faced these problems in the 1970s: At the beginning of the decade, the gross primary school enrollment rate was only about 80 percent. Then, the government began the largest primary school construction program in history. The program, known as INPRES, produced 61,807 new schools by 1979. But even more striking than its scale is the insight the program offers: In densely populated areas — presumably those that already had schools — the program had no statistically significant effect on enrollment or the lifetime wages of children. But in sparsely populated areas, “where each new school significantly reduce(d) the distance to school,” the government’s program had a pronounced effect. For every school built per thousand children, the education levels of the first age group exposed to the program increased by up to 0.19 years. School construction was thus more impactful in rural areas than in urban areas, showing that school construction can have diminishing returns.

Consistent with the idea that there can be diminishing returns to investment in education supply, enrollment growth in the developing world has slowed after decades of heavy spending. Research from Rachel Heath and Ahmed Mushfiq Mubarak suggests that supply is no longer the problem — instead, governments should consider the demand for education. The economists test this theory using data from Bangladesh. They compare the effects on enrollment of a supply-side incentive — educational subsidies — with the effects of a demand-side incentive — the prospect of a job in the garment industry. Because garment jobs require education and are often “females’ only or best option to work outside the home,” they motivate girls to remain in school.

Ultimately, the authors find that the subsidy did not significantly alter a young girl’s probability of being in school. A 10 percent increase in garment factory employment within a given village, however, increases that chance by 1.3 percent. In a country that was already approaching universal primary enrollment and gender parity in access to education, investment in the supply of education thus had diminishing returns. The demand channel more effectively drove children to attend school. 

It seems strange that the prospect of work in garment factories better motivated enrollment than cold, hard cash. But decisions about education are often more complex in poor areas and in the absence of extensive social safety nets. People in poor countries do a drastically different kind of cost-benefit analysis than people in rich ones. And the returns to education are often unclear in impoverished environments, as Robert Jensen finds in his 2010 study of children’s beliefs about the returns to education in the Dominican Republic. Interviews found that students generally underestimated the returns to attending high school on future wages, in part, Jensen suggests, because of residential segregation by socioeconomic status. Many young people, “only able to observe the earnings of [the educated] workers who live in their neighborhoods,” grow up with lower estimates of the returns to education. Attending school has an opportunity cost: Students forgo marriage, the ability to help with chores at home and wages that they might otherwise earn. For most, the returns to education outweigh those alternatives. But factors beyond a child’s control — such as their place of residence — can make that impossible to see.

Once again, interventions that target the demand for education could be transformative. As part of the discussions that Jensen’s researchers had with students, a randomly selected portion of the group was told of the true returns to education — which, of course, were higher than they originally believed. Strikingly, those students completed on average about 0.3 more years of school over the following four years than students who were not told about the true benefits of schooling. 

Faulty perceptions about the returns to education aren’t the only barriers that can keep children at home. In communities without internet access or computers, there are no virtual classrooms, so COVID-19 related school closures make learning nearly impossible. Estranged from school for so long, some 10 million students might never return. And pandemic or not, financial hardship continues to drive children to become breadwinners at a young age.

All of this points to one thing: A lack of schools isn’t the only problem. Governments have long worked to put a school within walking distance of every child. Now, they need to ask why many children still aren’t making the journey.

Arjun Shanmugam ’23 can be reached at Please send responses to this opinion to and op-eds to


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