The Human Capital Cost of Strategic Grade Inflation - Benoît Schmutz-Bloch

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15

Sep

2026

LEMMA

11h - 12h

Séminaire

Lemma - 4 rue Blaise Desgoffe, 75006 Paris. Salle Maurice Desplas

Benoit is a professor in the Department of Economics at École Polytechnique, as well as a research member of CREST and the Institut des Politiques Publiques. His research interests include urban economics and its intersections with public, political, labor, and environmental economics.

Co-authors: Modibo Sidibé (World Bank)

Abstract:

When governments subsidize private education through per-enrollment payments, schools are incentivized to inflate the internal grades that govern student progression — keeping students enrolled, and preserving the subsidies they generate, without improving genuine learning. We document this mechanism with administrative data from Mali. Using within-school, cross-exam authority variation as our identification strategy, we show that grade inflation is pervasive in private high schools, leading to poor graduation outcomes and large efficiency costs. We build a structural model of student progression and school grading policy in which learning is based on a chain of prerequisites disrupted by grade inflation. We estimate the model using the public sector as a truthful benchmark, quantify the human capital cost of grade inflation and evaluate the benefits associated with alternative subsidy schemes.

Adresse : LEMMA - 4 rue Blaise Desgoffe - 75006 - PARIS