Economic Shocks and Education: Investigating the Relationship between Income Shocks and School Dropout in Malawi
Kayser, Emily Beth
Although multiple issues affect the decision to drop out of school in Malawi, income shocks are one of these reasons that can be corrected through government intervention. Using survey data, this analysis separately measures the relationship between aggregate and idiosyncratic income shocks on the likelihood that a student drops out of school in Malawi. The results indicate that idiosyncratic income shocks increase the likelihood of dropping out of school by 4.84 percentage points on average while aggregate income shocks have no effect. This finding is important because it suggests that policy makers should focus resources to create and implement programs to ameliorate the effect of idiosyncratic shocks, instead of spending on social programming for aggregate shocks.
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