Do school facilities matter? The case of the Peruvian Social Fund (FONCODES)

Abstract

Since its creation in 1991, the Peruvian Social Fund (FONCODES) has spent about US $570 million funding micro-projects throughout the country. Many of these projects have involved the construction and renovation of school facilities. In this paper, we use data from FONCODES, the 1993 Peru population census, the 1994 and 1997 Peru Living Standards Measurement Surveys (LSMS), and a 1996 household survey conducted by the Peruvian Statistical Institute (INEI) to analyze the targeting and impact of FONCODES investments in the education sector. We present results based on a number of descriptive and econometric techniques, including non-parametric regressions, differences-in-differences, and instrumental variables estimators. We show that FONCODES projects in the education sector have reached poor districts and, to the extent that they live in these districts, poor households. FONCODES has had a positive effects on school attendance rates for young children, but not on the likelihood that children will be at an appropriate school level for their age. We conclude with some general recommendations and suggestions for further research.