C. ferraz v. pereira incentivizing school completion

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This presentation is part of the programme of the International Seminar "Social Protection, Entrepreneurship and Labour Market Activation: Evidence for Better Policies", organized by the International Policy Centre for Inclusive Growth (IPC-IG/UNDP) together with Canada’s International Development Research Centre (IDRC) and the Colombian Think Tank Fedesarrollo held on September 10-11 at the Ipea Auditorium in Brasilia.


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C. ferraz v. pereira incentivizing school completion

  1. 1. Incen%vizing School Comple%on: Evidence from the Renda Melhor Jovem Program Claudio Ferraz PUC-­‐Rio, BREAD, JPAL Vitor Pereira PUC-­‐Rio Brasília, September 2014
  2. 2. Introduction § CCTs have been effective in increasing school attendance for primary schooling across many developing countries
  3. 3. Introduction § CCTs have been effective in increasing school attendance for primary schooling across many developing countries § But school drop-out and limited learning is still a huge problem, specially in secondary schooling and for poorer students.
  4. 4. Introduction § CCTs have been effective in increasing school attendance for primary schooling across many developing countries § But school drop-out and limited learning is still a huge problem, specially in secondary schooling and for poorer students. § High school drop-out has been shown to reduce future wages, decrease labor market participation, and affect crime and health outcomes (Lleras-Muney 2005, Lochner and Moretti 2004, Oreopoulos 2007)
  5. 5. Introduction § CCTs have been effective in increasing school attendance for primary schooling across many developing countries § But school drop-out and little learning is still a huge problem, specially in secondary schooling and for poorer students. § High school drop-out has been shown to reduce future wages, decrease labor market participation, and affect crime and health outcomes (Lleras-Muney 2005, Lochner and Moretti 2004, Oreopoulos 2007) § How can we incentivize poor students to complete high school?
  6. 6. School Attainment by income status .4 .6 .8 1 % individuals that completed each grade School attainment by income quintile 5 6 7 8 9 10 11 12 Grade Lowest income quintile Highest income quintile Note: Cohort aged 20-24, data from PNAD 2012 state of RJ
  7. 7. The intervention § Renda Melhor Jovem provides incentives for high school students to stay in school and progress through grades
  8. 8. The intervention § Renda Melhor Jovem provides incentives for high school students to stay in school and progress through grades § How?
  9. 9. The intervention § Renda Melhor Jovem provides incentives for high school students to stay in school and progress through grades § How? § Students are eligible to open a savings account and receive an yearly transfer upon passing their grade in high school (can withdraw 30%) § Passing 10th grade: R$700 § Passing 11th grade: R$900 § Passing 12th grade: R$1000 § Passing 13th grade (technical schools): R$1200 § Scoring above 500 in the national college admission exam: R$500
  10. 10. The intervention (cont.) § Who is eligible? § High school students from families that receive the Renda Melhor Program (Income per capita less than R$100) § Enrolled in a public school and younger than 17 years old. § Students have to take at least 2 (out of 3) state assessment exams per year. § Students are informed of their eligibility in schools and have to go to a bank branch to open savings account
  11. 11. Program implementation § Program was phased-in across municipalities in the state of Rio § 3 municipalities in 2011 § 52 municipalities (out of 92) in 2012
  12. 12. Phase-in of Renda Melhor Jovem Total Received program Year 2011 2012 Municipalities 92 3 52 Schools 1,060 95 808 Total Students in school 362,000 361,867 355,572 Students eligible for RMJ 5,725 61,743 Students with savings account 2,830 16,120
  13. 13. Phase-in of Renda Melhor Jovem Total Received program Year 2011 2012 Municipalities 92 3 52 Schools 1,060 95 808 Total Students in school 362,000 361,867 355,572 Students eligible for RMJ 5,725 61,743 Students with savings account 2,830 16,120 § Less than half of eligible students manage to open a bank account
  14. 14. Logistical issues § Many students don’t receive the award because they don't open their account or don’t have a valid account. § Opening the account involves 3 steps: § 1) Documents in hand: ID, CPF (equivalent to SSN), proof of residence of the students and parents (if younger than 18) § 2) Register at the school (Student information is sent to the bank) § 3) Go to the designated bank agency, bring all the documents and sign the contract to VALIDATE the account. § Focus groups: There is a lot of misunderstanding about those procedures in the field.
  15. 15. Where is the leakage?
  16. 16. Poor students more likely to open account
  17. 17. Empirical strategy § Estimate regressions of schools, with school and year effects: yit =β0 +β1Accountit + Xit 'δ + μi + λt + εij § y is a measure of schooling outcomes: drop-out and pass rates § Account is the % students that have a valid account (continuous treatment in treatment group and zero otherwise)
  18. 18. Empirical strategy (cont.) § Important: § We will underestimate the effects as we have outcomes for the whole school, but only poor students are eligible for the program § Endogenous selection for those that open an account (will deal with this in the future) § Can also estimate an intention-to-treat effect using the % of eligible students as treatment measure
  19. 19. Effects of program in 2011
  20. 20. Effects of program in 2011
  21. 21. Effects of program in 2012
  22. 22. Effects of program in 2012
  23. 23. Results: all grades Drop-out rate Pass rate Repetition rate (1) (2) (3) (4) (5) (6) % valid accounts -0.107 -0.037 0.253 0.272 -0.146 -0.235 [0.039]*** [0.065] [0.046]*** [0.072]*** [0.037]*** [0.070]*** Effect for 10% increase -0.10 -0.03 0.04 0.04 -0.08 -0.12 Mean 11.22 11.22 69.43 69.43 19.335 19.335 School effects Y Y Y Y Y Y Year effects Y Y Y Y Y Y Municipal trends N Y N Y N Y Demographics Y Y Y Y Y Y R2 0.1 0.16 0.25 0.33 0.06 0.13 Observations 6,287 6,287 6,287 6,287 6,287 6,287
  24. 24. Concluding remarks and next intervention… § Low take-up for saving accounts due to logistical constraints § Still, we find significant increase in pass-rates and some reductions in drop-out rates § Look at the effects on test scores and do analysis at individual level rather than school level data
  25. 25. Concluding remarks and next intervention… § Low take-up for saving accounts due to logistical constraints § Still, we find significant increase in pass-rates and some reductions in drop-out rates § Look at the effects on test scores and do analysis at individual level rather than school level data § Future plans: § Information campaign to bring youth into the program (many 1000s students still out) § Intervention to help youth use their resources better. Mainly, those that graduate and that might end up with a significant amount of resources

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