Preschool education in Brazil : does public supply crowd out private enrollment?

• Author(s): Bastos, Paulo ; Straume, Odd Rune
• Date: 2013
• Persistent ID: http://hdl.handle.net/1822/25431
• Origin: RepositóriUM - Universidade do Minho
• Subject(s): Preschool education; Private and public provision; Crowding-out
• Document Type: Research paper
• Language: English

Description

We examine if an expansion in the supply of public preschool crowds-out private enrollment using rich data for municipalities in Brazil from 2000-2006, where federal transfers to local governments change discontinuously with given population thresholds. Results from a regression-discontinuity design reveal that larger federal transfers lead to a significant expansion of local public preschool services, but show no effects on the quantity or quality of private provision. These findings are consistent with a theory in which households differ in willingness-to-pay for preschool services, and private suppliers optimally adjust prices in response to an expansion of lower-quality, free-of-charge public supply.