Why tuition free policy in secondary vocational schools cause decreased student enrollment in China?

• In Event: Round-Table Session 1
  In Round-table Session: Issues in Technical and Vocational Education (TVET) in Asia

Proposal

As investment in human capital has increasingly been viewed as a key driver of economic growth and school fees have been seen as a major obstacle to educational access, governments in many developing countries have initiated policies that reduce or eliminate school fees in order to boost school enrollment. Some studies examining the impact of policies aiming at reducing the private costs of schooling find that policies such as fee reduction or abolition (Barrera-Osorio, Linden, & Urquiola, 2007; Duflo, 2001; Schultz, 2004; Deininger 2003; Grogan 2009; Nishimura, Yamano, and Sasaoka 2008; and Al-Samarrai and Zaman 2007; Lucas, 2012), conditional cash transfers (Kremer et al. 2004), providing school uniform (Evans, Kremer, & Ngatia, 2009), free meals (Vermeersch & Kremer, 2004), free medicines (Miguel and Kremer, 2004) or a package of benefits (Kremer et al., 2002) suggest positive effects on school enrollment as a whole. However, many of the studies examining the policy effects focuses on the impact of price on take-up of the services from the demand side.
In contrast, research examining the impacts on provider incentives and the quality of service delivered argues that fee reduction or abolition policies could have negative effects on school quality, which, in turn, lead to the sorting of higher quality peers and wealthier families to private schools. There are at least three mechanism that may result in the decrease of school quality: first, the school quality might deteriorated because of crowding which increases the pupil to teacher ratio and reduces the resources per student; second, the fee reduction policy might change the way of financing schools which might not fully compensate the lost fee revenue; third, the change of major financial resources might change the underlying accountability framework and school productivity, causing the trade-off between efficiency and equality. For example, in examining the fee abolition policies in several African countries, several studies found that the quality of education declined due to inadequate funding, spaces and teachers (Bold, 2011; Hillman and Jenkner, 2002; Deininger, 2003; Nishimura et al., 2008; Lucas, 2012).
As the lack of skilled labor has increasingly been seen as a main obstacle of the economic growth and structural change, China implemented tuition free policy applicable to all students in secondary vocational schools in 2013 in order to encourage more middle school graduates to choose vocational education instead of high school and increase the provision of skilled labor. But surprisingly, student enrollment decreased obviously after the implementation of this policy.
This study examines the impact of free secondary vocational education with a focus on the supply side, mainly the local government. The tuition abolition policy was initiated by the central government and carried out by the county governments. Different county governments were required to take different share of the cost of secondary vocational education. The discrete change of the policy dosage regarding the region and financial burden of the county governments suggests a geographic regression discontinuity approach for evaluating the causal effects of the policy, with the administrative boundary forming a multidimensional discontinuity in longitude-latitude space. And we focus on specific geographic areas with relevant economic and demographic factors varying smoothly at two counties’ boundary besides the treatment: some county government was required to took 80% of the total cost in secondary vocational schools while others only took 40%.
Results show that compared with the areas where county governments only took 40% of secondary vocational schools’ expenditure, county governments’ relatively higher fiscal share significantly lowered its secondary vocational school enrollment in 2013 by around 50.8%. And the negative results do not occurred in 2011 and 2012. Moreover, we utilize the regression results from two neighboring counties with the same financial share as the falsification test. We found that there is no significant difference in the change of student enrollment between two neighboring counties with the same financial share.
Things become even worse if we exclusively focus on the student enrollment of majors closely related to local pillar industry. The number of student enrolled in majors closely related to local pillar industry experienced a more remarkable decrease than other majors. Actually, in the context of China, middle school graduates prefer to choose majors helpful in entering a college instead of choosing employment-oriented majors such as those respond to local pillar industry. Hence the recruitment of employment-oriented majors largely depends on local government’s effort in attracting students to enroll in majors closely related to local industry. However, an increase in county governments’ fiscal burden caused by the tuition free policy weakens county governments’ motivation to attract secondary vocational students and the serious decrease of student enrollment will lead to labor force shortages in the future, which may have a negative influence on the development of local pillar industry.
This study not only provides a new geographic method for policy evaluation and causal inference but also makes further exploration about how local governments respond to central government’s mandatory education policy and the impact of their responses on policy effects.

Authors

• Zhilei Tian, Peking University

• Ying Xu, Peking University