This paper looks at the private schooling sector in Pakistan, a country that is seriously behind schedule in achieving the Millennium Development Goals. Using new data, we document the phenomenal rise of the private sector in Pakistan and show that an
increasing segment of children enrolled in private schools are from rural areas and from middle-class and poorer families. We argue that private schools are better able to adapt to local conditions and use local labor markets in a cost-effective manner, allowing the savings to be passed on to parents through very low fees. We explore two strategies—the use of coeducational schools and the use of female teachers who are locally resident—that private schools follow to ensure low costs in the provision of education. This mechanism—the need to hire teachers with a certain demographic profile so that salary costs are minimized—defines both the possibility of private schools (where they arise, fees are low) and their limits (private schools will not arise everywhere and at all levels
of education).