Freeman Spogli Institute for International Studies Program on Energy and Sustainable Development Stanford University


Research at PESD


Contracting for Dreams in Ningshan County, Shaanxi

REAP Project (Completed)
2010-2013

Problem

Demand for higher education in China is expanding at a rate that is unprecedented anywhere in the world. Yet for many of China’s rural citizens, education beyond the middle school level remains out of reach. This is true despite the fact that China’s continued growth will depend increasingly upon an educated rural labor force. If the rural labor force is unable to dramatically improve its level of education in the near future, growth could be severely constrained.

Why will so many of these rural students
not finish high school?

Why does higher education remain out of reach for so many of China's youth? For one thing, rapidly increasing tuition and fees may prevent qualified young Chinese from attending high school and college. The cost of attending one year of high school is equal to more than 20 times a poor rural family’s per capita annual income. What is more, this calculation does not take into account the opportunity cost of going to high school. Foregone earnings on behalf of a student enrolled in high school in fact triple the real cost of attendance. In poor rural areas, only 1 in 4 young people enroll in high school, whereas nearly 90 percent of their urban counterparts do. It is estimated that hundreds of thousands of young people do not go to high school each year simply because they cannot afford to.

 

Read REAP's Educational Challenge Report on the costs of education in China


Over the long term, rural communities with limited means lose out tremendously when their young people work in factories or at construction sites rather than study math, advanced language, or computers. The resulting loss in human capital will also hinder China’s efforts to modernize over the coming decades. Experience teaches that an educated citizenry is the necessary foundation of a modern economy. A recent Japanese study links mistakes made in the design of Japan’s education system during the 1970’s with the sluggish growth of the past two decades (Godo and Hayami, 2009).

Goals

There are two objectives of the current study. The primary objective is to test the proposition that students in rural areas are willing and capable to attend high school so long as that option is financially feasible. To do so, REAP has teamed with the government of Ningshan County, Shaanxi Province to provide scholarships to any junior high school (chu zhong) student who successfully tests and enrolls into senior high school (gao zhong).
 
The experiment will allow REAP to test—jointly with the participation of the government—the fundamental question: are poor students’ liquidity constrained when making their higher education decisions? Without any of the uncertainties that have always surrounded academic studies in the past, the Ningshan Contracting for Dreams can definitively show how much the nation would benefit from moving to a system that seeks to make high school affordable to all. The work will be an example of a partnership formed between academics (Stanford and the Chinese Academy of Sciences); and the government of China. Through this partnership we will pursue the proposed project’s research/policy objective and believe we can change China — at least in one small dimension.

Approach

Sample selection

The current study requires close cooperation with a county government in China. REAP and its affiliates in China secured this cooperation with the government of Ningshan County, Shaanxi Province, in China’s poor northwest. To serve as controls, REAP has also gained the cooperation of two adjacent counties, Shiquan and Hanyin. This study is therefore not a truly randomized experiment, but rather a natural experiment. On account of this, REAP will use Difference in Difference Matching (DDM), including traditional Propensity Score Matching and Covariate Matching, in order to evaluate resulting datasets. See our paper (Deng et al.) for details on this approach.

The location of intervention and control counties

Baseline survey

A home in rural Ningshan County

REAP selected and trained 21 enumerators from Northwest University (Xibei Daxue), each of whom received training for three days in Xi’an city. REAP and the enumerators then conducted a baseline survey from September 12 through 17 in Ningshan county and the two control counties, Hanyin and Shiquan. Our sample includes more than 6000 7th and 8th grade students (chu yi and chu er) from 36 schools across the three counties. 1500 students participated from Ningshan county and a total of over 4500 students in Hanyin and Shiquan counties.

The baseline survey administered to each student consisted of several parts, including:

  • Three student forms, including a standardized math test, and standardized self esteem test, and a form soliciting information about the student’s background and educational history. The latter includes relevant details on his/her family members, such as employment status of his/her parents and other family members, family assets, his/her schooling history, and his/her goals after graduating from junior high school.
  • Four teacher forms, one each for the homeroom teacher, math teacher, Chinese teacher, and English teacher. These forms were designed to collect information on the characteristics of the teachers and some general information about each class.
  • One form for the school principal, designed to collect information on the facilities, composition of the teachers and students, and which program fees have been waived.
  • One form for the director in the education bureau in the surveyed county to collect general information on the composition of the junior high schools, junior high and high school student enrollment, and the requirements for enrollment in the respective counties.

Treatment and control groups

A school in rural Ningshan County

REAP arranged for each participating student in the county to sign a contract with the financial bureau of Ningshan County. The contract stipulates that if the student successfully tests into high school, the county will pay for his/her high school education.

The control group will be drawn from junior high school classes in the two neighboring counties, Hanyin and Shiquan. One third of the 7th and 8th graders in Hanyin and Shiquan counties (totaling about 5000 7th and 8th graders) will constitute the control group.

 

Evaluation

The primary objective of the study is to track the impact of the contract agreement on the academic performance of 7th and 8th graders in the treatment versus control schools.

The main outcome variables used to evaluate the data will include:

  • Improvement of scores on a REAP-administered standardized baseline test. The test will be given to all students in their first (chu yi) year and at the end of their third (chu san) year of junior high school.
  • Student scores on China’s standardized High School Admissions Test.
  • Student grade rankings in Math, Chinese, and English.
  • A standardized, REAP administered self-esteem test.
  • A survey detailing the student plans for high school and beyond.
  • The rate of matriculation to high school.

Results

After conducting an endline test in 2010, our results showed that the tuition relief program had a positive impact on the academic performance of the Ningshan students involved in the experiment. Looking at the data of the treatment students, the mean of their endline math test scores was 18.37 points higher than that of their baseline math test scores. In comparison, the control students tested an average of 16.02 points higher in their endline math tests in relation to their baseline math test in 2009. This difference between the treatment and control groups was statistically significant at 1%.

Through further analysis, we discovered that the tuition relief program provided the greatest benefit to the students in the areas that were more economically disadvantaged. More specifically, the poorer students who originally scored in the middle of the grade distribution benefited the most from the tuition relief program. In a broad sense, these results might suggest that the poorer students in a community will work harder in school if given the opportunity and option to continue their education into high school.

In summary, the tuition relief program had a clear positive impact on the students involved. However, as with all experiments, there can be unaccounted factors that contribute to the data collected. In order to confirm the validity of these findings, REAP will continue to conduct similar experiments in different parts of rural China.