Can outsourcing improve government services in fragile states? To answer this question, we present results from a field experiment to study the Partnership Schools for Liberia program. This program delegated management of 93 public schools — staffed by government teachers and run free of charge to students — to private providers. We randomly assigned treatment at the school level and sampled students from pre-treatment enrollment records to identify the effectiveness of the treatment without confounding the effect of endogenous sorting of pupils into schools. After one academic year, students in outsourced schools scored .18σ higher in English and mathematics than students in control schools. Private providers improved significantly reduced teacher absenteeism (“better management”), but also spent more per student and employed more teachers than control schools (“extra resources”). Non- experimental mediation analysis suggests better management and extra resources played roughly equal roles in improving student performance. Our design allows us to study heterogeneity across providers: While the highest-performing providers generated increases in learning of 0.26σ, the lowest-performing had no impact on learning. In line with program rules, there is no evidence that providers engaged in selective admissions, which was explicitly prohibited. However, one provider shifted pupils from oversubscribed schools and underperforming teachers to other government schools. This provider was the only one whose funding was not linked to the number of students enrolled, and whose contract did not forbid direct dismissal of teachers. These results suggest that using the private sector to improve government services in fragile states is promising, but also highlight the importance of procurement rules and contracting details in aligning public and private interests.
February 06, 2018