The child health implications of privatizing Africa's urban water supply

Can private sector participation (PSP) in the piped water sector improve child health? I use child-level data from 39 African countries during 1986-2010 to show that PSP decreases diarrhea among urban-dwelling, under-five children by 2.6 percentage points, or 16% of its mean prevalence. Children from the poorest households benefit most. PSP is also associated with a 7.8 percentage point increase in school attendance of 7-17 year olds. Importantly, PSP increases usage of piped water by 9.7 percentage points, suggesting a possible causal channel explaining health improvements. To attribute causality, I exploit time-variation in the private water market share controlled by African countries' former colonizers. A placebo analysis reveals that PSP does not affect respiratory illness, nor does it affect a control group of rural children.