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Large-Scale Education Reform in General Equilibrium: Regression Discontinuity Evidence from India

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  • Gaurav Khanna

Abstract

The economic consequences of large-scale government investments in education depend on general equilibrium effects in both the labor market and the education sector. I develop a general equilibrium model capturing the consequences of massive countrywide schooling initiatives. I provide unbiased estimates of the model’s elasticities, using a regression discontinuity derived from Indian government policy. The earnings returns to a year of education are 13.4%, and the general equilibrium labor market effects substantially depress returns, by 6.6 percentage points. These general equilibrium effects have distributional consequences across cohorts and skill groups, whereby unskilled workers are better off and skilled workers worse off.

Suggested Citation

  • Gaurav Khanna, 2023. "Large-Scale Education Reform in General Equilibrium: Regression Discontinuity Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 131(2), pages 549-591.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/721619
    DOI: 10.1086/721619
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    Cited by:

    1. Crawfurd, Lee, 2024. "Feasibility first: Expanding access before fixing learning," International Journal of Educational Development, Elsevier, vol. 104(C).
    2. Shunsuke Imai & Yuta Okamoto, 2023. "Kernel Choice Matters for Boundary Inference Using Local Polynomial Density: With Application to Manipulation Testing," Papers 2306.07619, arXiv.org, revised Jan 2024.
    3. David Roodman, 2023. "Large-Scale Education Reform in General Equilibrium: Regression Discontinuity Evidence from India: Comment," Papers 2303.11956, arXiv.org, revised Sep 2023.
    4. Bobba, Matteo & Frisancho, Veronica & Pariguana, Marco, 2016. "Perceived Ability and School Choices: Experimental Evidence and Scale-up Effects," TSE Working Papers 16-660, Toulouse School of Economics (TSE), revised Jul 2024.
    5. Chiplunkar, Gaurav & Weaver, Jeffrey, 2023. "Marriage markets and the rise of dowry in India," Journal of Development Economics, Elsevier, vol. 164(C).
    6. Hall, Stephen G. & O’Hare, Bernadette, 2024. "A model of the impact of government revenue and quality of governance on schooling," International Journal of Educational Development, Elsevier, vol. 108(C).
    7. Beuermann, Diether W. & Bottan, Nicolas L. & Hoffmann, Bridget & Jackson, C. Kirabo & Vera-Cossio, Diego, 2024. "Does education prevent job loss during downturns? Evidence from exogenous school assignments and COVID-19 in Barbados," European Economic Review, Elsevier, vol. 162(C).
    8. Yasser Razak Hussain & Pranab Mukhopadhyay, 2023. "How Much do Education, Experience, and Social Networks Impact Earnings in India? A Panel Data Analysis Disaggregated by Class, Gender, Caste and Religion," SAGE Open, , vol. 13(4), pages 21582440231, December.
    9. Busso, Matias & Montaño, Sebastián & Muñoz-Morales, Juan & Pope, Nolan G., 2024. "The unintended consequences of merit-based teacher selection: Evidence from a large-scale reform in Colombia," Journal of Public Economics, Elsevier, vol. 239(C).
    10. Bargain, Olivier B. & Vincent, Rose Camille & Caldeira, Emilie, 2024. "Shine a (Night)Light: Decentralization and Economic Development in Burkina Faso," IZA Discussion Papers 17459, Institute of Labor Economics (IZA).
    11. Likai Chen & Georg Keilbar & Liangjun Su & Weining Wang, 2023. "Inference on many jumps in nonparametric panel regression models," Papers 2312.01162, arXiv.org, revised Jan 2025.

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