By Harry Anthony Patrinos, David Lakshmanan Ariasingam
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Additional resources for Decentralization of education: demand-side financing, Part 292
Under a system of market choice, which may include tuition tax credits or vouchers, both private and public schools compete for students. Each child receives a voucher that can be used to pay a specified amount of the tuition fees. However, in a public choice system the government always pays for schools that it also operates, though there may be some functions contracted out. The market approach is thought to produce superior private benefits, while the public approach is thought to produce superior social benefits.
Other demand-side interventions include bilingual education for linguistic minorities and curriculum changes for previously excluded population groups. At different levels of schooling, different financing tools are more appropriate (table 4). Demand-side financing mechanisms must be considered in the context of a country's entire education system; they are not panaceas. The level of education must also be considered. Consequently, choice mechanisms should be considered pragmatically as one tool among many to bring about workable education reforms suited to the educational level and local resources and needs.
The purpose is to capture the essence of these tools using simple working definitions. Specific examples are described in the second section of the chapter. Definitions of Mechanisms For the purposes of this review a stipend is a cash payment that a public agency makes to a family to offset schooling expenses for a child. Core expenses such as books, tuition, and transport, and incidental expenses such as materials, game fees, and clothes are covered. A stipend is also used to compensate families for the loss of the child's labor.