teachers—even after controlling for education and training. Second, they showed that the government could hire teachers on temporary contracts, and that these contract teachers although paid much less performed just as well, or even better, than permanent teachers. Finally, decreasing salaries and hiring contract teachers did not worsen the quality of new applicants over time.<sup>19</sup> Looking at the full budget of Taleem, additional studies showed that the fiscal costs of teacher absenteeism amounted to the entire amount of a special tax used to fund Taleem’s universal education program and that the difference in costs between public and private schooling amounted to a significant fraction of the overall budget.<sup>20</sup> <u>Study Type 4: The fourth set of studies, on whether PS exacerbated inequality never really took off.</u> While the theoretical arguments were clearer, with the rights group claiming that if the elite left private schools, the children in GS would never have the ability to mobilize and demand higher quality and the incentive among the political elite to provide better schooling for the poor would now decline. The advocates pointed out that if the rich went to PS but still paid education taxes, this would actually increase the cross-subsidy to education from the rich to the poor. Empirically, this turned out to be almost impossible to resolve.

This then, was the state of play at the time of the BIG DECISION.

# _The Big Decision and Its Aftermath_

On December 20<sup>th</sup> , the Political Committee convened in a standing-room only hall. In a decision that was marked by its seemingly Solomonic flavor, the committee noted the following in its famous report on the provision on schooling in Taleem. It started by noting that quality education was the right of every citizen. It then noted that private schools were creating inequality in the system by allowing only those with money to access such schooling. Then came the recommendations. The first was that all private schools would be required to accommodate at least 25 percent of their enrollment from among the poor and that the government would pay for each such child the equivalent cost of schooling in government schools. The second recommendation started by noting that the evidence on quality was inconclusive. Depending on what point of view one took, and what one thought was important, the

> 19 In one study, researchers randomly allocated children to teachers on permanent and temporary contracts and found that those assigned to teachers on temporary contracts reported higher Math and Science scores (Duflo, Dupas and Kremer 2012 and 2014 in Kenya). In a second study, researchers randomly allocated temporary teachers to schools and showed that this increased scores among children attending these schools (Muralidharan and Sundararaman 2013 in the Indian state of Andhra Pradesh). A third study used a “natural experiment” and showed that a policy change that altered hiring from hiring only permanent to hiring only temporary teachers had no negative impact on test scores, and further, did not change quality of those who were applying to become government teachers (Bau and Das 2014a in Pakistan). A fourth study experimentally doubled the wages of permanent teachers and showed that despite the doubling of wages, there was no change in quality (Muralidharan and others, in process, from Indonesia). But in Taleem everything could be, and was contested. One study showed that the program of teachers on temporary contracts led to higher test-scores only when an NGO ran the program. When the government ran the program, test-scores did not increase because in many cases, the government could not get its act together in time for the evaluation, and actually did not manage to hire the temporary teachers (Bold and others 2013). 20 Muralidharan and others (2014a) use a nationwide panel in Indian schools, collected over a decade to show that even as public expenditures for education and school infrastructure increased over this time, teacher absenteeism was slower to decline. They compute the fiscal cost of absence at $1.5 billion per year, which is 60% of the annual funds raised from India’s special education tax. Pritchett and Aiyar (2014) look at the difference in student costs between public and private schools and show that this difference is `suggests an excess of public of private cost of Rs.50000 crores, which is 0.6% of Indian GDP. Accounting for differences in learning increases the excess cost to Rs.232000 crores, which is 2.8% of GDP, or $50 billion.

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