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The Effects of School Closure Threats on Student Performance: Evidence from a Natural Experiment

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Listed:
  • Chiu Ming Ming

    (Purdue University, West Lafayette, IN 47907, USA)

  • Joh Sung Wook

    (College of Business Administration, Seoul National University, Gwanak-gu, Seoul 151-916, Korea)

  • Khoo Lawrence

    (School of Management and Economics, Chinese University of Hong Kong (Shenzhen), Shenzhen, Guangdong, China)

Abstract

We exploit a natural experiment to test whether school closure threats can increase staff effort and improve performance. The Hong Kong government overestimated post-1997-Handover mainland Chinese immigration and local births, creating excess capacity in many school districts. In 2003, with student enrollment falling to new lows (increasing cost per student), the government announced that it would close schools that were unable to recruit enough students. Since schools compete for students within their own district, the accidental excess capacity created closure threats that varied by district. Difference-in-differences analyses show that after initiation of this policy, student scores in heavily overbuilt districts were lower than scores in other districts and lowest in districts with the fewest students per class. Although closure threats were counterproductive for improving performance, the school closures eventually improved overall school quality, as typically, the lowest performing schools in each district closed.

Suggested Citation

  • Chiu Ming Ming & Joh Sung Wook & Khoo Lawrence, 2016. "The Effects of School Closure Threats on Student Performance: Evidence from a Natural Experiment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(4), pages 1-39, October.
    • Handle: RePEc:bpj:bejeap:v:16:y:2016:i:4:p:39:n:4
    DOI: 10.1515/bejeap-2015-0149
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    References listed on IDEAS

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    Cited by:

    1. Emily Hannum & Xiaoying Liu & Fan Wang, 2021. "Estimating the Effects of Educational System Consolidation: The Case of China’s Rural School Closure Initiative," Economic Development and Cultural Change, University of Chicago Press, vol. 70(1), pages 485-528.
    2. Larsson Taghizadeh, Jonas, 2019. "Effects of school closures on displaced students and future cohorts in Sweden 2000-2016," Working Paper Series 2019:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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    More about this item

    Keywords

    closure threat; excess capacity; competition; school performance; natural experiment;
    All these keywords.

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • G3 - Financial Economics - - Corporate Finance and Governance
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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