Can Free Provision Reduce Demand for Public Services? Evidence from Kenyan Education

In 2003 Kenya abolished user fees in all government primary schools. Analysis of household survey data shows this policy contributed to a shift in demand away from free schools, where net enrollment stagnated after 2003, toward fee-charging private schools, where both enrollment and fee levels grew rapidly after 2003. These shifts had mixed distributional consequences. Enrollment by poorer households increased, but segregation between socio-economic groups also increased. The shift in demand toward private schooling was driven by more affluent households who (i) paid higher ex ante fees and thus experienced a larger reduction in school funding, and (ii) appear to have exited public schools partially in reaction to increased enrollment by poorer children.