Title: Does Private School Competition Improve Public School Performance? The Case of Nepal
Description: In developed countries, the evidence on the impact of school type on student performance is mixed. Researchers are also interested in finding out the effect of private school competition on educational outcomes. The evidence on this for developed countries is mixed as well. What is the effect in developing countries? There are not sufficient studies for developing countries to reach one conclusion. Using data from the survey of the Ministry of Education, Nepal-2005 for School Leaving Certificate Exam (SLC), this dissertation attempts to seek answers to the above two issues for the case of Nepal. The first part of this study analyzes private and public school performance using OLS and logistic models. The study adopts the propensity score matching technique to account for the selection bias problem. The second part of this dissertation attempts to explore the impact of private school competition on public school performance using the number of private schools in the neighborhood as a continuous measure of competition.

A binary measure of competition is also used where school is defined to face competition if there is more than one private school in the vicinity of the sample public school. However, in this analysis, there exists an identification problem because private school enrollment is likely to be correlated with public school performance. To address this problem, the study uses the existence of a motorable road within an hour's walking distance from the sample school as an instrument for number of private schools in the neighborhood. The results from the OLS and logistic estimation on the effect of school type on student performance show that public schools consistently have a negative relationship with student performance. On the impact of private school competition on public school performance, the OLS results show no significant relationship using both continuous and binary measures of competition. In contrast, the IV method indicates a positive and significant impact of private school competition on public school performance, which holds true for both types of measures of private school competition.