Does private school competition improve public school performance? The case of Nepal

Using data from the survey of the Ministry of Education, Nepal-2005 for school leaving certificate (SLC) exam, this paper attempts to estimate the impact of private school competition on public school performance for the case of Nepal. The study uses the number of private schools in the neighborhood as a measure of competition. The identification problem is that private school enrollment is likely to be correlated with public school performance. To address this, the study uses the existence of a motorable road within an hour's walking distance from the sample school as an instrument for number of private schools in the neighborhood. The OLS results show no significant relationship. In contrast, the IV method indicates a positive and significant impact of private school competition on public school performance, which holds true for the continuous and binary measure of private school competition.

► The impact of private school competition on public school performance is analyzed. ► The public schools performance correlates with private school enrollment. ► Instrument variable method is used to address the identification problem. ► The IV estimates suggest positive but small impact for the case of Nepal.