Borrowing Constraints and Demand for Remedial Education: Evidence from Tanzania

We use a cash transfer to relax households’ borrowing constraints, then elicit their willingness to pay (WTP) for a remedial education program offering tutoring and life-skills training. Lottery losers were willing to pay 3,300 Tanzanian Shillings for the program, seven percent of per-capita monthly expenditures. For those identified at baseline as able to borrow, WTP increases by three percent upon winning a lottery prize of 3,200 TSh. For those unable to borrow, WTP increases by 27 percent upon winning the lottery. We conclude that borrowing constraints limit access to educational programs, and may increase inequality of educational attainment.