Title: Economies of Scale and Heterogeneity in the Provision of Public Goods: Evidence from School Consolidation in China

Speaker: Ma Xiang

Institution: Hong Kong University of Science and Technology

时间：2016年10月20日 16：00-17：30

地点：半岛·体育bob官方网站614会议室

Abstract: This paper examines the trade-offs faced by central decision-makers responsible for delivering local public goods. From 2000 to 2010, China closed more than 50% of its primary schools. While smaller and academically weaker schools were closed and students' test scores increased, students and their families paid additional costs due to a longer home-to-school commute post school closure. This paper builds and estimates a structural model of local governments' decision-making to understand these stylized facts and to recover the preferences of local authorities. I pay particular attention to cases when there may be heterogeneous productivity across schools, increasing returns in schooling production, and home-to-school commuting costs. The estimation shows that schools that were closed had lower mean productivity. Some very small schools with relatively high productivity were also closed. I use a moment-inequalities approach to estimating on the weight local governments place on the cost to families attending a more distant school. The very low upper bound of this estimate implies that distance cost was under-weighted in local governments' decision.