Macroeconomic Effects of ‘Free’ Secondary Schooling in the Developing World
Working Paper 31029
DOI 10.3386/w31029
Issue Date
Revision Date
This paper studies the macroeconomic effects of publicly funded (‘free’) secondary schooling in the developing world. Our analysis is based on an over-lapping generations model of human capital accumulation that we estimate to match experimental evidence on the effects of scholarships for poor but talented students in Ghana. The model predicts that nationwide free secondary schooling increases average education levels but reduces GDP per capita in the long run. The human capital gains from free schooling in the model are offset by lost income during schooling years, negative selection of new students, and reductions in fertility by high-ability households.