Finance, management, and costs of public and private schools in Indonesia

Abstract

This paper investigates the impact of public vs private finance of education and public vs private management of schools on school cost and efficiency, using school-level data on revenues, expenditures, enrollments, examination scores and student characteristics from Indonesian primary schools. We find that in Indonesia, where schools generally operate at very low funding levels, more money is likely to bring better school quality. Private management is more efficient than public management in achieving academic quality. Private funding also improves efficiency whether the schools are publicly or privately managed, but the incremental effect declines as the local funding share increases.