Abstract
We report results from a randomized evaluation of a merit scholarship program for adolescent girls in Kenya, and discuss their implications for understanding educational production and for the policy debate surrounding merit awards. Girls who scored well on academic exams had their school fees paid and received a large cash grant. Girls eligible for the scholarship showed substantial gains in exam scores and gains persisted in the years following the competition. Both student and teacher school attendance increased in the program schools. Our results suggest not only that study effort is responsive to incentives but also that there are positive externalities: boys, who were ineligible for the award, also experienced exam gains, as did girls with low pretest scores (who were very unlikely to win). These large externalities address some of the equity concerns raised by critics of merit awards, and provide further rationale for public education subsidies.
