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 in education: shadow education. According to the Annual Survey of Education Report (2013), 34 percent of private school students and 17 percent of public school students undertake private tuition in Punjab. Anecdotal evidence suggests that private tuition has a positive impact on learning outcomes. Keeping this in view, it is possible that private tuition, rather than a difference inschooling quality, is driving the observed learning gap between public and private schools? This study employs a fixed-effects framework, using panel data from the Learning and Educational Achievement in Punjab Schools (LEAPS) survey, to quantify the impact of private tuition on learning outcomes in public and private schools. We analyze the demand and supply dynamics of the shadow education market in Punjab, and find that private tuition has a positive significant effect on learning outcomes, specifically for public school students. For English, much of the learning gap between public and private schools is 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 thatprivate tuition is predominantly supplied by private school teachers, but that they do not shirk their regular 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-quality formal schooling.