The Benefits and Costs of Alternative Strategies toImprove Educational Outcomes

This paper reviews the stylized facts regarding the levels of human capital investments and the returnsto those investments in developing countries. These returns are substantial and are pervasive acrossdemographic groups. Returns are comparable between men and women and between urban and ruralresidents. The study shows that 23% of children in developing countries do not complete the fifthgrade and of these, 55% started school but dropped out. We argue that eliminating dropouts is themost cost effective way to make progress on the goal of Universal Primary Education. Of the variousmechanisms we can use, mechanisms that stimulate schooling demand have the strongest evidence ofsuccess to date and are the most cost effective.[...]