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Do Public Colleges in Developing Countries Provide Better Education than Private ones?

Yona Rubinstein Sheetal Sekhri (Dec 2011)


Quality of tertiary education is one of the primary determinants of the development levels of a nation Tertiary education levels vary by whether they are offered by public or private institutions
Within these levels, there are outcome differences between developed and developing countries

For the developed countries, private institutions are very popular and in many cases actually better than their public counterparts In developing countries, however, public universities are generally believed to be superior
This is supported by widespread belief that private universities are more concerned with maximizing profits and minimizing costs, rather than with providing quality education

In India, like in most other developed countries, public education is considered superior at the tertiary level
The belief is substantiated by comparison of educational outcomes (distribution of earnings) of the two types of institutions However, this may not be due to causal effect of public universities, but just because of better students opting for such colleges in the first place

The paper aims to unearth costs and benefits associated with public and private tertiary-level education in India
Two variables are sought to be understood: a) whether public education produces better outcomes in India and b) what, if any, is the additive effect of public over private tertiary level education


With the advent of economic reforms and the rise of the service sector, there has been a noticeable rise in the demand for tertiary education in India
However, even with the surge in demand, less than a tenth of the college going population enrolls in tertiary education

Public institutions in India are funded by the Government and are not allowed to accept private donations
Instructors in these institutions are generally offered additional services such as tenure and stabilities which makes it an attractive proposition

Private colleges charge over 5 times the public colleges and do not offer the same level of job benefits to the instructors Regulations in the country ensure that both public and private institutions take the same exit tests, enabling a consistent comparison on that front


In India, there is widespread debate on whether Government should foster entry of private players in the education space
Proponents of the idea highlight the cost effectiveness strategy of the private level players, indicating that this would eventually trickle down and help the students with lower burden of education expenses

Critics of the idea, however, note that the focus on cost effectiveness may be at the expense of providing high quality education, which would hurt the students and the economy in the long run
While there has been considerable research in the field of tertiary education, none of them have highlighted the differences between public and private institution impacts The paper seeks to highlight that value added by public institutions has not been significant
Even high post college earnings are possible without significant value added by participating institutions


The results and findings of the paper are based on the admission records and exam results of four education colleges (two public and two private) within a region in the country
There were 3,394 observations in the sample which excluded students admitted under reservation policies

Public college students fared better in the exit exams and private students, indicating clearly that the outcomes were better for them
However, this might be due to higher academic ability of the students themselves, rather than due to value addition from the institutions


Overall, family background of the students were also compared to understand any difference in the intake criteria
The public schools have more affluent students

Variables Age School Board XII Senior Secondary score College exit exams Rural residence

Private 17.99 0.78 58.55 1378.73 0.124 Fathers Occupation

Public 17.95 0.63 70.07 1461.08 0.086


0.15 -11.5 -82.35 0.038

Agriculture Business Professional Labor

0.092 0.42 0.054 0.032

0.065 0.37 0.041 0.039

0.026 0.05 0.012 -0.007


As the bandwidth around the cut-off score decreases from 12 points to 8,4 and 1 respectively, the difference in college exit score become insignificant

Difference in score is result of student characteristics rather than impact of college


Cost effectiveness can be a factor to determine the efficiency of the colleges The average cost-per-pupil per annum in the private colleges in the year 2006-2007 was 13,022 Indian Rupees whereas the average cost-per-pupil in the public colleges was 13,743 Indian Rupees Risk possible was that the composition of reserved category students is overshadowing the value addition by the public colleges The above risk assumption is found to be unfounded after the analysis of comparing reserved category students and the private college students