Abstract
We develop a model of private tutoring where its demand emerges from poor schooling infrastructure and shirking by teachers. We analyse the government’s policy choice and society’s educational outcome. If the teacher is to be made more dutiful, his salary must be raised sufficiently, which means that very little money is left for infrastructure. In contrast, if the overall education is to be improved, better infrastructure is needed; but then the teachers’ salary has to be reduced and private tutoring may partly substitute class room teaching. The households may prefer the latter. This gives rise to a policy dilemma.
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