Summary: Since its creation in 1991, the Peruvian Social Fund (FONCODES) has spent about US$570 million funding micro-projects throughout Peru. Many of these projects have involved building and renovating school facilities. The authors analyze the targeting and impact of FONCODES investments in the education sector, using data from FONCODES, Peru's population census, Peru's 1994 and 1995 Living Standards Measurement Surveys, and a 1996 household survey conducted by the Peruvian Statistical Institute. They present their results based on various descriptive and econometric techniques, including non-parametric regressions, differences-in-differences, and instrumental variables estimators. They show that FONCODES projects in the education sector have reached poor districts and, to the extent they live in those districts, poor households. FONCODES has had a positive effect on school attendance rates for young children, but not on the likelihood that children will be at an appropriate school level for their age. Among other recommendations, they suggest that FONCODES consider random assignment of some education projects for a sub-sample of the population, to test the robustness of the study's assumptions and results. Lack of disaggregated data on such measures as the time children spend in school, pupil-teacher ratios, and scholastic achievement precluded analysis of the impact of FONCODES education projects on school quality. Collecting such data, and understanding how improvements in school infrastructure interact with other school-level changes to produce more learning, should be a research priority.
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