Of particular interest are the effects on enrollment of being female, of having a private school in the settlement and the _differential_ effect of being a female in a settlement with a private school, which is captured by the interaction term. The presence of a private school in the settlement significantly increases enrollments for boys by 16.4 percentage points, but has a much larger effect on girls given by the additional interaction term of 8.1 percentage points. Put another way, in settlements without private schools, females are 16 percentage points less likely to be enrolled compared to boys. When there are private schools in the settlement, the enrollment of both genders increases, but female enrollment increases more so that the overall gender gap decreases to 8 percentage points.

Following Jacoby and Mansuri (2006), the next column (Column 3, Table 2) repeats the same regression with household fixed-effects. That is, we look at the differential effect of schoolpresence across girls and boys in the same household—doing so allows us to identify the differential effect of school-presence across genders while controlling for unobserved householdlevel omitted variables (for instance, households that care less about schooling may be located in settlements without schools). The gender penalty of school-presence is strong and significant: compared to a boy in the same household, a girl in a settlement without a private school is 18 percentage points less likely to be enrolled but this gap decreases to 9 percentage points in settlement with such schooling options. Private schools increase enrollments, more so for girls than boys and where they exist they are also used by the poor. The key to the use of private schools by the poor lies in their affordability.<sup>18</sup>

# <u>Private School Fees</u>

Earlier studies in smaller samples had shown that private schools charged very low fees. Alderman and others (2001) for instance, document that private school fees are affordable even for the poor in urban cities of Quetta and Lahore, charging an average of Rs.85/month in their

> 18 These results contrast with the discussion in Lloyd, Meta and Grant (2006), who argue that private schools do not increase girls’ enrollment, but locate where girls’ enrollment was high to begin with. There are several problems with their interpretation. The evidence that private schools do not lead to higher girls’ enrollment is drawn from 12 villages, of which only 5 do not have a private school in the second wave of their survey. They find no contemporaneous difference in female enrollments between the villages with and without private schools, which is not consistent with the nationally representative data in Table 1. In their randomized treatment-control study, Alderman and others (2001) shows that the setting up of a private school leads to a 20 percentage point increase in female enrollment, which is very close to the numbers in Table 1. The argument that private schools locate in villages with higher girls’ enrollment does not hold in larger samples either. Table 7 below will look at private school locations in villages with girls’ primary schools and with girls’ primary and secondary schools based on data from 26000 villages in Punjab province. We will argue that only the second type of school increases the likelihood of private school existence in the village. This has more to do with the availability of _teachers_ than students, particularly since 90 percent of private schools in rural areas cater only to the primary sections.

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