Paying (and Paving) my way: Extra-class participation and rent extraction

Extra classes, or private tutoring offered by schoolteachers to their pupils, are a widespread phenomenon, particularly in developing countries. This educational arrangement might leave room for distorted incentives. Using data from Vietnam, I find that teachers grant higher school grades to pupils attending extra classes, but extra-class attendance does not yield higher scores on standardized achievement tests. I interpret these results as evidence of opportunistic behavior, whereby teachers exploit their arbitrariness in awarding grades, which count for secondary school admissions, to extract rents. The extent of grade inflation is higher in institutionally underdeveloped settings. Attending extra classes also generates a gap in pupils’ self-concept. These findings provide relevant policy implications to align this informal sector with the country's education system.