Handing Over the School Keys: The Impact of Privatisation on Education Quality

In recent decades, privatisation has become a mainstream policy option considered by politicians worldwide to improve the quality of schooling. This paper discusses the theoretical reasoning underlying the links between privatisation and education quality/productivity, and evaluates the empirical research. For privatisation to function well, it is crucial that the right competitive incentives exist, which in turn requires specific system design. While the cross-national literature consistently indicates positive long-term effects of private provision, the within-country literature is more mixed (although there is very little evidence of negative effects). Yet it is important to note the significant flaws in the system design of many privatisation initiatives, which have unsurprisingly ensured that the effects of these initiatives thus far have been small or moderate at best. Flawed privatisations are unlikely to yield very strong gains. The policy implication is that politicians must pay careful attention to system design when privatising their education systems.