Local Community Composition and School Provision in India

We study provision of schools in the Indian setting and the challenges associated with a heterogeneous society when local communities play an active role in provision. Based on the political economy literature we expect more fragmented communities to have weaker collective action. We hypothesise that this weak tendency to act collectively impacts different schools differently depending on the extent of their reliance on local community action. Consistent with our expectation, we show that there are fewer schools financed by local community (private and local government schools) in fragmented districts. Presence of public schools, provided by state and central government, for which the community has little discretionary financing powers, is not impacted. However, since public schools rely on active community action for monitoring of schools, they are found to be of poor quality. Exhaustive empirical tests have been performed to support the mechanism and discount alternative explanations.