Long-term impact of investments in early schooling – Empirical evidence from rural Ethiopia

We examine the cumulative impact of early schooling investments on later schooling outcomes using enrollment status and relative grade attainment as short-run and long-run measures of schooling. Using a child-level longitudinal data set from rural Ethiopia, we estimate a dynamic conditional schooling demand function where the coefficient estimate on the lagged dependent variable captures the impact of all previous periods schooling inputs and resources. We find that a child who is enrolled in the prior period is 33 percentage points more likely to be enrolled currently. These lagged effects are stronger for girls and for children from higher income households.