**Table** **<u>7.  Model 2. Students' Characteristics</u>**

|||**Nationa**|**l**<br>||**Urban**|||**Rural**|<br>|
|---|---|---|---|---|---|---|---|---|---|
||Coeff.|S.E.|Level of<br>Sig.|Coeff.|S.E.|Level<br>of Sig.|<sup>Coeff.</sup>|S.E.|Level of<br>Sig.|
|Student's gender (Male)|0.211|0.309|0.495|0.985|0.489|0.044|0.034|0.503|0.946|
|Student's age|-0.358|0.150|0.017|-0.484|0.179|0.007|-0.204|0.224|0.363|
|Pre-school education (Yes)|-0.069|0.279|0.805|-0.046|0.455|0.919|-0.259|0.434|0.551|
|Repetition in 5th grade (Yes)|-0.652|0.323|0.044|-0.204|0.370|0.581|-0.743|0.430|0.084|
|Blurred Vision (Yes)|-1.281|0.366|0.000|-1.301|0.560|0.020|-1.286|0.580|0.027|
|Teacher's performance|0.244|0.070|0.000|0.382|0.084|0.000|0.227|0.107|0.034|
|Student's attitude towards learning|-0.111|0.063|0.079|-0.105|0.076|0.166|-0.101|0.103|0.326|
|Household income|0.152|0.054|0.005|0.135|0.053|0.012|0.115|0.089|0.194|
|House services|0.023|0.017|0.188|0.023|0.022|0.296|-0.002|0.027|0.944|
|Father's schooling level|0.105|0.073|0.151|0.097|0.067|0.144|0.210|0.099|0.034|
|Mother's schooling level|0.121|0.065|0.062|0.127|0.065|0.052|0.081|0.111|0.466|
|Parent's opinion of educational services in school|0.309|0.101|0.002|0.265|0.110|0.016|0.288|0.167|0.085|
|Correction of self-selection bias at stage 2|8.441|13.094|0.519|-4.276|19.114|0.823|9.487|25.695|0.712|
|Correction of self-selection bias at stage 3|-3.689|13.007|0.777|12.644|19.728|0.522|-12.356|21.904|0.573|
|Constant|50.832|2.948|0.000|48.597|3.872|0.000|53.011|4.893|0.000|
|Total Variance|34.958|||39.105|||39.228|||
|Variance within the schools|23.408|||23.479|||22.563|||
|Variance among the schools|11.550|||15.626|||16.665|||
|Variance component ratio of school effect|0.330|||0.400|||0.425|||
|R squared( explained variance)|0.277|||0.305|||0.159|||
|Students' R squared(explained variance)|0.017|||0.048|||0.025|||
|Schools' R squared(explained variance)|0.529|||0.505|||0.291|||
|Number of Students|13,439|||7,721|||5,718|||
|Number of Schools|1,553|||740|||813|||

Source: Authors' estimates using the Primary Education Assessment, second round 1997, SEP.

The advantage of this model is that it provides extensive information about the sources of variation that constitute the R-squared. At the national level, the student socioeconomic variables explain 27.7 percent of the total variation. This is understandable, because almost all explanatory variables are categorical. Notice that this set of socioeconomic student variables explains more than 52 percent of the variation among schools but only explains 1.7 percent of the students’ variance. In urban areas, the explanatory power of the socioeconomic variables is similar to that of the national level. The introduction of these variables has several effects. It reduces in absolute terms the variance among schools (from 24.54 in model 1 to 11.55 in model 2) because individuals are less heterogeneous. The variance component ratio of school effect from model 1 to model 2 dropped by 18% percent, implying that the variance component ratio of student effect increased by 69%. Thus, schools appear to be more similar (homogenous) considering students’ characteristics, but the differences among schools (heterogeneity) remain relatively important. The explanatory power of the student 15