Incentives to teach badly: After-school tutoring in developing countries

Schools in developing countries frequently offer for-profit tutoring to their own students. This potentially gives teachers a perverse incentive to teach less during school to increase demand for their tutoring. Through this mechanism, the market for tutoring can adversely affect student learning, especially for students who do not participate in tutoring. I model and present empirical evidence on these effects, using survey and test score data from Nepal. The evidence suggests that when schools offer for-profit tutoring, teachers teach less during the regular school day. As a consequence, performance on the national secondary-school exam appears to suffer among students with a low propensity to enroll in tutoring. An implication is that discouraging teachers from tutoring their own students or reducing entry barriers for third-party tutors could increase student achievement.