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

Schoolteachers in developing countries frequently offer for-profit tutoring to their own students. The teachers have an incentive to teach less during school to increase demand for their tutoring in many cases. Thus, the market for tutoring can have spillover effects even on students who do not partake in tutoring. I model and present empirical evidence on these effects, using survey and test score data from Nepal. I find that when teachers offer for-profit tutoring, they teach less during the regular school day, causing students to do worse on the national secondary-school exam. Tutoring also increases inequality in test scores among classmates. In this context, banning teachers from tutoring their own students or reducing entry barriers for third-party tutors could increase student achievement. JEL codes: O12, O15, I20, J45 ∗I am grateful to Pascaline Dupas, Liran Einav, Michael Kremer, Ilyana Kuziemko, Adriana Lleras-Muney, and several seminar and conference participants for helpful comments. Special thanks to Paul Glewwe for helpful comments and for bringing the data set to my attention. Saurav Bhatta and Uttam Sharma shared the data set with me and generously answered my questions about it. Cecilia Mo provided outstanding research assistance. Contact information: [email protected].