Editors’ Summary

It has long been understood that economic growth and development are not achieved by brute-force factor accumulation alone. The pursuit of a development path that combines both greater efficiency and social fairness has been high on the agenda for many governments in Latin America during the last decade (if not longer). A preoccupation with equity and efficiency, and the best ways to combine them, also permeates the five papers in this Spring issue of Economía.

A possible trade-off between greater efficiency and equal opportunity is central to the debate on school vouchers, for instance. Whereas economists since Milton Friedman have argued that school choice would align provider incentives with the interests of consumers and thus lead to increases in educational quality, a more recent literature points to the possibility that school choice might exacerbate stratification by socioeconomic status across schools. In “School Choice, Stratification, and Information on School Performance: Lessons from Chile,” Patrick J. McEwan, Miguel Urquiola, and Emiliana Vegas contribute to this literature in two ways. First, using highly disaggregated, district-level data for Chile and a regression-discontinuity design, they find evidence that the entry of private schools into the education market is not associated with significant increases in test scores but is associated with increases in social stratification. This conclusion is consistent with previous results from the literature, suggesting that greater school choice leads to increased sorting, with no commensurate improvements in average achievement.

Second, McEwan, Urquiola, and Vegas consider the implications of sampling variance (and even of “population variance” over time) for policy schemes that reward or punish schools on the basis of changes in average test scores. Policymakers have focused on these so-called value added (that is, first-differenced) measures of test scores, since test score levels are highly correlated with family socioeconomic status, as a result of the stratification previously discussed. Changes in scores also reflect sampling variation, however, including variation among the specific groups of students starting school in any given year, as well as genuine changes in the quality of the services provided by the schools. Although this issue is unlikely to be a serious problem for large municipalities, it can generate substantial rerankings for individual schools and even for smaller districts, as the authors confirm through a number of statistical tests. These findings suggest that the Chilean debates on school choice, on the ideal design for voucher schemes, and on the precise manner in which data on student achievement can be used to reward or punish schools have contributed to advances in the educational agenda in Latin America but have not yet reached a final conclusion.

The concern with combining equity and efficiency also underlies the “conditional cash transfer revolution” that has transformed social policy in Latin America over the last ten years. The first of these programs began somewhat timidly in Brazil and Mexico in the mid-1990s, yet by 2007 some 80 million individuals across the continent had received government assistance through some form of conditional cash transfer. In “Cash Transfers, Conditions, and School Enrollment in Ecuador,” Norbert Schady and Maria Caridad Araujo evaluate the impacts of Ecuador’s cash transfer program, known as the Bono de Desarrollo Humano (BDH), on school enrollment. A novel aspect of the paper is that it uses differences between the initial program design and the subsequent implementation to assess the relative importance of the conditions (as opposed to the cash itself) in explaining the effects of the program. Given the costs of monitoring and enforcing conditions, this assessment is of considerable policy interest.

Schady and Araujo exploit several idiosyncrasies in the program’s design and implementation. First, assignment into treatment and control groups was random in the initial phase of the project. In practice, however, actual treatment did not perfectly coincide with the random assignment. Second, data were collected both before and after the program was implemented, from both treatment and control groups. Third, the program was designed and announced as a conditional transfer program, in which households would receive the transfer conditional on children’s school enrollment and attendance, but the condition was not...