Abstract
Understanding the institutional features that can improve learning outcomes and reduce inequality is a top priority for international and development organisations around the world. Economists appear to have a good case for support to non-governmental alternatives as suppliers of schooling. However, unlike other policy domains, freer international trade or privatisation, economists have been remarkably unsuccessful in promoting the adoption of this idea. We develop a general positive model of why governments typically produce schooling which introduces the key notion of the lack of verifiability of socialisation and instruction of beliefs, which makes third party contracting for socialisation problematic. We use the model to explain variations around the world in levels of private schooling. We also predict the circumstances in which efforts to promote the different alternatives to government production – like charter, voucher, and scholarship – are likely to be successful.
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