As China’s economy boomed, classrooms in rural provinces emptied. One in four teenagers were dropping out of junior high to work in factories to help their impoverished families. Giving cash to students as an incentive to stay in school, as many nonprofits have done in other countries, seemed like an obvious solution.

But for Scott Rozelle, a good idea isn’t good enough—it has to be backed by empirical evidence. So Rozelle, founder and co-director of the Rural Education Action Project...

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