Less debt, more schooling? Evidence from cross-country micro data

Marin Ferry, Marine de Talancé () and Miguel Niño-Zarazúa
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Marine de Talancé: ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel, LEDA-DIAL - Développement, Institutions et Modialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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Abstract: Soaring levels of public debt in low-income countries are fuelling concerns about their ability to achieve the Sustainable Development Goals, such as free access to primary education. In the late 1990s and 2000s, international financial institutions introduced a series of debt relief initiatives aimed to restore debt sustainability among highly indebted countries. This study examines the impact of these initiatives on primary school attendance. We exploit the temporal variation in the implementation of these policies, in combination with individual-level data from 177 Demographic and Health Surveys covering more than 1.5 million school-age children from 44 low-income countries to implement difference-in-differences and spatial difference-in-discontinuity estimators. Results suggest that debt relief initiatives, by freeing up additional public resources, have significantly contributed to increasing primary school attendance in heavily indebted countries. Impact heterogeneity analysis also shows that debt relief has been effective at reducing wealth-based, intergenerational, religious, ethnic and spatial inequalities in education. Our results provide robust evidence to assert that debt relief, in combination with other financing sources, can contribute to improving educational outcomes in highly indebted poor countries.

Keywords: Debt relief; Education; Financing for development (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-edu, nep-fdg, nep-ifn and nep-ure
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Published in Journal of Comparative Economics, 2022, 50 (1), pp.153-173. ⟨10.1016/j.jce.2021.07.002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04258128

DOI: 10.1016/j.jce.2021.07.002

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