The Welfare Implications of Private School Vouchers: Evidence from India

Harshil Sahai

The Welfare Implications of Private School Vouchers: Evidence from India In 2009, India launched what is now the largest private school voucher system in the world targeted to disadvantaged households. Policy of this scale may affect academic and financial outcomes across both recipients and non-recipients. This paper uses detailed administrative records to study the welfare consequences of this voucher policy, accounting for the multiple dimensions of school preferences as well as how schools may respond in equilibrium. Estimates from oversubscription lotteries suggest vouchers deliver modest gains to learning outcomes, with many applicants attending private schools counterfactually. Combining rich choice data from applications together with lottery price variation, a model of school choice suggests money-metric welfare gains are large relative to program costs for recipients, driven both by academic improvements in school quality and financial savings from avoided school fees. Administrative data from schools together with a model of strategic pricing suggests private schools may raise prices in response to the policy, resulting in welfare losses for non-recipients.

About Harshil Sahai

Harshil Sahai is a Ph.D. candidate in Economics at the University of Chicago. His research is focused on development economics, with an emphasis on education and labor markets. By building partnerships with public and private organizations, he leverages new sources of data, field experiments, and economic models to study policy questions in developing countries. In his dissertation, Harshil is working with government agencies in India to quantify the welfare impacts of the largest private school voucher system in the world targeted to disadvantaged households. He is also partnering with Facebook to study the role of social networks in driving migration decisions in India, and what this may mean for the economic value of social capital. In other work, he has designed randomized control trials to estimate the demand for clean air among low-income populations of New Delhi and the value of monsoon forecasts as a tool for climate change adaptation among Indian farmers. His research has been funded by the National Science Foundation Graduate Research Fellowship, the Becker Friedman Institute, and the Abdul Latif Jameel Poverty Action Lab. Before his graduate work, Harshil was a Pre-Doctoral Fellow with Michael Greenstone at the Energy Policy Institute of Chicago and completed his B.A. in Mathematics and Economics from Swarthmore College.