Outsourcing Service Delivery in a Fragile State: Experimental Evidence from Liberia

Mauricio Romero (Instituto Tecnológico Autónomo de México)
Justin Sandefur (Center for Global Development)
Wayne Sandholtz (UC San Diego)

Abstract: Can outsourcing improve public service delivery in fragile states? To answer this question, we present results from a field experiment in Liberia, where the government delegated management of 93 public schools — staffed by government teachers and run free of charge to students — to private providers. We randomly assigned treatment status 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 .18 sd higher in English and mathematics than those in control schools. Private providers improved scores on an index of managerial practices and significantly reduced teacher absenteeism (“better management”), but also spent significantly 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 the observed learning gains. In line with program rules, we find no evidence that providers engaged in selective admissions. Our design allows us to study heterogeneity across providers: While the highest-performing providers increased learning by 0.26 sd, the lowest-performing had no impact. Providers also differed in behavior that may generate negative spillovers for the broader school system, including removing pupils to keep class sizes small, and reassigning underperforming teachers to other public schools. These results suggest that leveraging the private sector to improve service delivery in fragile states is promising, but also highlight the importance of procurement rules and contracting details in aligning public and private interests.