Kiel Working Papers, Kiel Institute for World Economics
No 1290:
Does Aid for Education Educate Children? Evidence from Panel Data
Axel Dreher, Peter Nunnenkamp and Rainer Thiele
Abstract: This paper empirically analyzes the impact of aid on
education for about 100 countries over the period 1970-2005. We estimate a
system of equations to test whether and to what extent the impact of
sector-specific aid on educational attainment depends on (i) the extent to
which aid adds to overall educational expenditure of the recipient
government, (ii) the strength of the link between government expenditure
and education, (iii) the quality of institutions in the recipient country,
and (iv) whether aid encourages institutional reforms. According to our
results, aid significantly increases primary school enrolment. This result
is robust to the method of estimation, employing instruments to control for
the endogeneity of aid, and the measure of institutional quality employed.
The degree of institutional quality, however, has no robust impact on this
relationship
Keywords: Aid effectiveness, Education, Sector-specific aid; (follow links to similar papers)
JEL-Codes: F35; O11; H52; I22; (follow links to similar papers)
38 pages, August 2006
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