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

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% in

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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