74 percent) between 1999 and 2001 (World Bank 2003a). Literacy rates increased from 40 to 43 percent between 1999 and 2001. Gender differentials shrunk significantly, mainly due to the large rise in female literacy rates from 34 to 43 percent in the same period (World Bank 2003a).

Despite the significant increase in enrolment rates, the reconstruction of the school system in Timor Leste faced many challenges. First, there was a shortage of teachers given that the majority, being Indonesian, had left the country by the end of 1999 (UNDP 2006). There was also a shortage of teachers that could teach in Portuguese. Second, not all schools were reconstructed and, as a result, school distances were much higher for some children than before the destruction. While enrolments were high, school attendance was low. Third, emergency funds were only available for a limited period of time. In 2001, 57% of the Timorese population still had no or little education.

Figure 3 reports the average educational grade attainment by year of birth and by gender in 2007. We include individuals born between 1950 and 1992. The data shows that cohorts that were of school age during the Indonesian occupation achieved higher level of education than older cohorts (i.e. those born in the 1970s compared to those born in the 1960s or before) testifying for an increasing trend as expected. The figure shows that despite the increasing trend a large fraction of individuals have low education levels. Interestingly, all curves start to drop after the 1987 cohort. This decreasing trend is observed among individuals aged 20 or younger in 2007 and provides evidence of a mismatch between the grade attended and the grade that they should have achieved at their age.<sup>4</sup> This is caused by a persistent sluggishness in grade achievement due to the high level of delayed entry to school and high rates of repetition.<sup>5</sup> The impact of the conflict in its different phases and the subsequent reconstruction efforts on schooling levels of children in Timor Leste is therefore unclear. The early years of violence coincided with an education for all policy in which quantity was preferred to quality. In addition, the 1999 violence that followed the withdrawal of Indonesian troops led to the destruction of schools and the removal of children from school. The reconstruction program implemented after 1999 tried to counteract this destruction, and achieved fast progress. However, the education sector was still in very poor shape. In the next section, we investigate in more detail the effects of the conflict on educational outcomes of boys and girls in Timor Leste.

# **4. Identification strategy and data description**

> 4 Those born in 1992 are 15 in 2007. So they might have at most completed grade 9 and this justifies part of the drop in the curves as the grade completed is right censored.

> 5 The high levels of school delay are also confirmed by the figures on gross and net enrolment ratios calculated using the TLSS 2001 and 2007: primary gross enrolment ratio was 105 percent in 2001 and 128 percent in 2007, while net enrolment ratios were 74 and 94 percent, respectively, in 2001 and 2007.

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