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This presentation is part of the programme of the International Seminar "Social Protection, Entrepreneurship and Labour Market Activation: Evidence for Better Policies", organized by the International Policy Centre for Inclusive Growth (IPC-IG/UNDP) together with Canada’s International Development Research Centre (IDRC) and the Colombian Think Tank Fedesarrollo held on September 10-11 at the Ipea Auditorium in Brasilia.
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Incen%vizing School Comple%on: Evidence from the Renda Melhor Jovem Program
Claudio Ferraz
PUC-‐Rio, BREAD, JPAL
Vitor Pereira PUC-‐Rio
Brasília, September 2014
Introduction
§ CCTs have been effective in increasing school attendance for primary schooling across many developing countries
Introduction
§ CCTs have been effective in increasing school attendance for primary schooling across many developing countries
§ But school drop-out and limited learning is still a huge problem, specially in secondary schooling and for poorer students.
Introduction
§ CCTs have been effective in increasing school attendance for primary schooling across many developing countries
§ But school drop-out and limited learning is still a huge problem, specially in secondary schooling and for poorer students.
§ High school drop-out has been shown to reduce future wages, decrease labor market participation, and affect crime and health outcomes (Lleras-Muney 2005, Lochner and Moretti 2004, Oreopoulos 2007)
Introduction
§ CCTs have been effective in increasing school attendance for primary schooling across many developing countries
§ But school drop-out and little learning is still a huge problem, specially in secondary schooling and for poorer students.
§ High school drop-out has been shown to reduce future wages, decrease labor market participation, and affect crime and health outcomes (Lleras-Muney 2005, Lochner and Moretti 2004, Oreopoulos 2007)
§ How can we incentivize poor students to complete high school?
School Attainment by income status
.4.6
.81
% in
divi
dual
s th
at c
ompl
eted
eac
h gr
ade
5 6 7 8 9 10 11 12Grade
Lowest income quintileHighest income quintile
Note: Cohort aged 20-24, data from PNAD 2012 state of RJ
School attainment by income quintile
The intervention
§ Renda Melhor Jovem provides incentives for high school students to stay in school and progress through grades
The intervention
§ Renda Melhor Jovem provides incentives for high school students to stay in school and progress through grades
§ How?
The intervention
§ Renda Melhor Jovem provides incentives for high school students to stay in school and progress through grades
§ How?
§ Students are eligible to open a savings account and receive an yearly transfer upon passing their grade in high school (can withdraw 30%)
§ Passing 10th grade: R$700 § Passing 11th grade: R$900 § Passing 12th grade: R$1000 § Passing 13th grade (technical schools): R$1200 § Scoring above 500 in the national college admission
exam: R$500
§ Can withdraw 30%, the rest is only received upon graduation from high school
§ Awards
The intervention (cont.)
§ Who is eligible?
§ High school students from families that receive the Renda Melhor Program (Income per capita less than R$100)
§ Enrolled in a public school and younger than 17 years old.
§ Students have to take at least 2 (out of 3) state assessment exams per year.
§ Students are informed of their eligibility in schools and have to go to a bank branch to open savings account
Program implementation
§ Program was phased-in across municipalities in the state of Rio
§ 3 municipalities in 2011
§ 52 municipalities (out of 92) in 2012
Phase-in of Renda Melhor Jovem
Total Received program Year 2011 2012 Municipalities 92 3 52 Schools 1,060 95 808 Total Students in school 362,000 361,867 355,572 Students eligible for RMJ 5,725 61,743 Students with savings account 2,830 16,120
Phase-in of Renda Melhor Jovem
§ Less than half of eligible students manage to open a bank account
Total Received program Year 2011 2012 Municipalities 92 3 52 Schools 1,060 95 808 Total Students in school 362,000 361,867 355,572 Students eligible for RMJ 5,725 61,743 Students with savings account 2,830 16,120
Logistical issues
§ Many students don’t receive the award because they don't open their account or don’t have a valid account.
§ Opening the account involves 3 steps:
§ 1) Documents in hand: ID, CPF (equivalent to SSN), proof of residence of the students and parents (if younger than 18)
§ 2) Register at the school (Student information is sent to the bank)
§ 3) Go to the designated bank agency, bring all the documents and sign the contract to VALIDATE the account.
§ Focus groups: There is a lot of misunderstanding about those procedures in the field.
Where is the leakage?
Poor students more likely to open account
Empirical strategy
§ Estimate regressions of schools, with school and year effects:
§ y is a measure of schooling outcomes: drop-out and pass rates
§ Account is the % students that have a valid account (continuous treatment in treatment group and zero otherwise)
yit = β0 +β1Accountit + Xit 'δ +µi +λt +εij
Empirical strategy (cont.)
§ Important:
§ We will underestimate the effects as we have outcomes for the whole school, but only poor students are eligible for the program
§ Endogenous selection for those that open an account (will deal with this in the future)
§ Can also estimate an intention-to-treat effect using the % of eligible students as treatment measure
Effects of program in 2011
Effects of program in 2011
Effects of program in 2012
Effects of program in 2012
Results: all grades
Drop-out rate Pass rate Repetition rate (1) (2) (3) (4) (5) (6)
% valid accounts -0.107 -0.037 0.253 0.272 -0.146 -0.235
[0.039]*** [0.065] [0.046]*** [0.072]*** [0.037]*** [0.070]***
Effect for 10% increase -0.10 -0.03 0.04 0.04 -0.08 -0.12 Mean 11.22 11.22 69.43 69.43 19.335 19.335 School effects Y Y Y Y Y Y Year effects Y Y Y Y Y Y Municipal trends N Y N Y N Y Demographics Y Y Y Y Y Y R2 0.1 0.16 0.25 0.33 0.06 0.13 Observations 6,287 6,287 6,287 6,287 6,287 6,287
Concluding remarks and next intervention…
§ Low take-up for saving accounts due to logistical constraints
§ Still, we find significant increase in pass-rates and some reductions in drop-out rates
§ Look at the effects on test scores and do analysis at individual level rather than school level data
Concluding remarks and next intervention…
§ Low take-up for saving accounts due to logistical constraints
§ Still, we find significant increase in pass-rates and some reductions in drop-out rates
§ Look at the effects on test scores and do analysis at individual level rather than school level data
§ Future plans:
§ Information campaign to bring youth into the program (many 1000s students still out)
§ Intervention to help youth use their resources better. Mainly, those that graduate and that might end up with a significant amount of resources