negative impacts on the quality of education. However, cost recovery schemes have administrative and equity implications: user fees may reduce attendance by the poor unless effective targeted scholarship programs compensate poorer students. Incomplete or inequitable fee collection only exacerbates existing underfinancing and inequity. Berstecher (1988) suggests that declining financial capacity of families to demand and pay for services during austerity and recession limits the efficiency of cost recovery ineasures. Little is known about the impact of cost recovery measures on education supply and demand.

4.05 Finally, privatization can mobilize nongovernment resources for education to compensate for declining public resources. Chile pursued this course with some success: private enrollments rose although only in subsidized private schools. Similar to cost recovery measures, privatization may reduce enrollments among poorer students who cannot afford to pay for education services, unless private schools supplement (rather than replace) public schools.

# B. Data collection effQrts

4.06 The difficulties of separating the costs of adjustment from the costs of external shocks, poor policies, or not adjusting, imply a continuing need for careful monitoring and analysis. To analyze the process through which adjustment affects the education sector, time series data are necessary for a number of years before, during, and after (if possible) adjustment. Data collection and monitoring efforts must focus systematically on a few key indicators that measure aspects of education supply and demand. Expenditure data should measure more than the absolute and relative allocation of public resources to the sector, for example private, community, and local or regional government financing. Sector resources should be categorized by function (capital versus recurrent), by purpose (salaries, supplies, maintenance), and by level of education. Data on income distribution, the potential returns to education, and the opportunity and private costs of education are necessary to understand education demand." 4.07 Existing case studies use several of these indicators, but never in a complete or systematic fashion. Collecting the above information is a massive undertaking, and may only be feasible in a few selected country studies. In the absence of comparative dynamics models, crosstabulations of indicators for a given country show how indicators are interrelated, and thus help explain how the sector has adjusted. Given country-specific initial conditions, shocks, and adjustment packages, country studies are the most effective framework for analyzing the adjustment pro.css.

4.08 Several research programs have begun data collecdion efforts that focus on indicators relevant to the dynamics of the adjustment process in particular countries. The Living Standard Measurement Surveys (LSMS) collect data on household income and L<sup>1</sup> Additional information is useful in evaluating changes in quality and equity, for example: changes in health and nutrition that affect children's learning ability; intake, repeater, and dropout rates, as well as student performance on standard exams; enrollment rates broken down by region, gender, and income level.

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