Title：Economies of Scale and Heterogeneity in the Provision of Public Goods: Evidence from School Consolidation in China

Presenter：Dr. Xiang MA, Institute for Emerging Market Studies; Institute for Advanced Study, Hong Kong University of Science and Technology

Moderator：Yongheng YANG, Professor, Associate Dean, School of Public Policy and Management, Tsinghua University

Discussant: Junming ZHU, Assistant Professor, School of Public Policy and Management, Tsinghua University

 

Time: 2017.03.30 (Thursday) 19:00-20:30

Venue: Room 302, School of Public Policy and Management, Tsinghua University

 

Abstract

This paper examines the trade-offs faced by central decision-makers responsible for delivering local public goods. From 2000 to 2010, China closed more than 50% of its primary schools. While smaller and academically weaker schools were closed and students' test scores increased, students and their families paid additional costs due to a longer home-to-school commute post school closure. This paper builds and estimates a structural model of local governments' decision-making to understand these stylized facts and to recover the preferences of local authorities. I pay particular attention to cases when there may be heterogeneous productivity across schools, increasing returns in schooling production, and home-to-school commuting costs. The estimation shows that schools that were closed had lower mean productivity. Some very small schools with relatively high productivity were also closed. I use a moment-inequalities approach to estimating bounds on the weight local governments placed on the cost to families attending a more distant school. The very low upper bound of this estimate implies that distance cost was under-weighted in local governments' decision.

 

Bio 

Xiang Ma is a postdoctoral fellow at Institute for Emerging Market Studies and Institute for Advanced Study, Hong Kong University of Science and Technology. He received his Ph.D in Economics from Yale University. His research has been focusing on public good provision and agriculture in emerging markets. He won the Cowles Foundation Fellowship and the Ryoichi Sasakawa Young Leaders Fellowship and has been a referee for Journal of Political Economy and Journal of Development Economics.