Private education in a poor country: The case of urban Bolivia

Investment in education is critical for economic growth and poverty alleviation. Such investment is typically being financed by the state. Yet in many countries families contribute privately to the education of their children. In an era of stagnating public budgets for education (and practically anything else), the private financing of education gains importance for a country's investment in human resources to be maintained. It is often claimed that private education is highly selective and afforded only by the rich. In this paper we examine the extent of private expenditure on education in a country that is among the poorest—Bolivia. In the empirical analysis we use data from both the 1990 and 1992 household surveys (Encuesta Intergrada de Hogares). The results show that there is a remarkable willingness of households in Bolivia to pay for private education for their children.