Determinants of School Attendance in Indian Villages: Do contextual effects matter?∗

Attaining universal primary school education remains an elusive goal in many developing countries. Previous explorations of schooling decisions have focused primarily on micro determinants. However, anecdotal evi-dence suggests that contextual effects at the village level may also be im-portant. In this paper, we explore the effect of village level characteristics on school attendance by formalising the anecdotal evidence, controlling for unobserved correlated effects and endogeneity, using a recent survey from two North Indian states. We find that various village-level influences matter in the school attendance decision. However, results depend impor-tantly upon whether or not one corrects for unobserved heterogeneity. JEL classification: I21, O12