Analyzing the Market for Shadow Education in Pakistan: Does Private Tuition Affect the Learning Gap between Private and Public Schools?

Over the past decade, Pakistan has seen the rapid growth of a third sector ineducation: shadow education. According to the Annual Survey of Education Report(2013), 34 percent of private school students and 17 percent of public school studentsundertake private tuition in Punjab. Anecdotal evidence suggests that private tuitionhas a positive impact on learning outcomes. Keeping this in view, it is possible thatprivate tuition, rather than a difference in schooling quality, is driving the observedlearning gap between public and private schools? This study employs a fixed-effectsframework, using panel data from the Learning and Educational Achievement inPunjab Schools (LEAPS) survey, to quantify the impact of private tuition onlearning outcomes in public and private schools. We analyze the demand and supplydynamics of the shadow education market in Punjab, and find that private tuitionhas a positive significant effect on learning outcomes, specifically for public schoolstudents. For English, much of the learning gap between public and private schoolsis explained by the higher incidence of private tuition among private school students,but this is not the case for mathematics and Urdu. We also find that private tuition ispredominantly supplied by private school teachers, but that they do not shirk theirregular class hours to create demand for their tuition classes, as is normally believed.On the demand side, private tuition acts as a substitute for receiving help at home.Moreover, it supplements formal education rather than substituting for low-qualityformal schooling.