education in middle- and low-income countries.<sup>6</sup> We update the estimates of teacher absence in rural India from 2003 and show that in spite of substantial increases in spending on education inputs over the last decade, improvements on this key measure of governance have been more modest. While corruption in education spending has been shown to hurt learning outcomes (Ferraz, Finan and Moreira, 2012), our estimates of the large fiscal cost of teacher absence highlight the importance of also focusing on governance issues that lead to significant amounts of ‘passive’ waste and inefficiency on an ongoing annual basis, but may not obtain as much media attention as one-off corruption scandals (Bandiera, Prat and Valletti, 2009; World Bank, 2010).

Second, our results showing that decreases in STRs are correlated with _increased_ teacher absence underscores the importance of distinguishing between average and marginal rates of corruption and waste in public spending. Niehaus and Sukhtankar (2013) propose this terminology in the context of wages paid to beneficiaries in a public-works program in India and find that marginal rates of leakage are much higher than average rates. We find the same result in the context of teachers and show that the effective absence rate of the marginal teacher hired is considerably higher than the average absence (because of the increased absence among existing teachers). This result, from a large all-India sample mirrors smallersample experimental findings in multiple settings: Duflo, Dupas and Kremer (2012), and Muralidharan and Sundararaman (2013) present experimental evidence (from Kenya and India) showing that provision of an extra teacher to schools led to an increase in the absence rate of existing teachers in _both_ settings. In other words, additional spending on school inputs (of which teacher salaries are the largest component) was correlated with increased inefficiency of spending.

Third, improvements in top-down administrative monitoring (inspections) are more strongly correlated with reduced teacher absence than improvements in bottom-up community monitoring (PTA meetings), consistent with experimental evidence on the relative effectiveness of administrative and community audits on reducing corruption in road construction in Indonesia (Olken, 2007). More broadly, a growing body of experimental evidence points to the effectiveness of audits and monitoring (accompanied by rewards or sanctions) in improving the performance of public-sector workers and service providers (including Olken (2007) in Indonesia; Duflo, Hanna and Ryan (2012) in India; and Zamboni and Litschig (2013) in Brazil). Our panel-data estimates using data from an “as is” nationwide increase in monitoring of schools provide complementary evidence to smaller-scale experiments and suggest

> 6The World Bank’s _World Development Report 2004_ provided estimates of provider absence in both health and education for a sample of low-income countries (World Bank, 2003; Chaudhury et al., 2006). These numbers have been widely cited in policy discussions, and reduction in provider absence rates is often included as an objective in aid agreements between donors and aid recipients.

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