Journal Article

Dodging Adverse Selection: How Donor Type and Governance Condition Aid's Effects on School Enrollment

Date Published

Nov 1, 2011

Authors

Zachary Christensen, Dustin Homer, Daniel L. Nielson

Publisher

World Development

Citation

Christensen, Z., Homer, D., & Nielson, D. L. (2011). Dodging Adverse Selection: How Donor Type and Governance Condition Aid's Effects on School Enrollment. World Development, 39(11), 2044-2053. doi:10.1016/j.worlddev.2011.07.018

Announcement

We employ AidData to test the effects of primary-education aid on school enrollment. We argue that the problem of adverse selection complicates both the allocation and the effectiveness of aid. We hypothesize that bilateral donors ought to have greater freedom to condition aid on recipient governance quality than multilateral donors, which are often bound by institutional rules to provide aid more impartially. Compared to their multilateral counterparts, bilateral donors may have advantages in overcoming adverse selection, resulting in bilateral aidÕs boosting enrollments to a greater degree. AidDataÕs extensive coverage of multilateral aid enables this analysis for up to 100 low- and low-middle-income countries from 1995 to 2008. Latent growth regression analysis suggests that, compared to multilateral donors, bilateral donors indeed condition their primary education aid on recipient control of corruption and that bilateral aid is significantly related to improved enrollments.

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Dan Nielson

Dan Nielson

Professor and Associate Chair of Political Science at Brigham Young University

Dustin Homer

Dustin Homer

Director of Engagement and Partnerships, Development Gateway

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