The Chilean voucher system implemented during the eighties, allows parents to choose between municipal and private subsidized schools. Its main purpose was to improve the quality and efficiency of education. Despite the improvements suggested by some indicators, there is wide-spread concern today that the Chilean educational system has lagged behind the country’s requirements and that many inefficiencies and inequities persist. Explanations for the present state of affairs are controversial, but there is no question that some aspects of the industrial organization of the education market, as well as some regulations, play an important role on it. On the supply side, non-profit institutions, such as those under the wings of religious orders or municipalities, coexist with profit-maximizing establishments. They have different objective functions, which in some cases may be far removed from the public interest in terms of offering best quality education. In addition, certain regulations do not allow municipal schools to be efficiently managed. On the demand side, parents have different objectives, time and income constraints together with different shadow prices for their children’s education. This implies that even if there existed a clear definition of the multidimensional concept of school quality, these parents would want to choose different points in the quality of education space, even under free access to educational services. The main purpose of this paper is to review issues related to the industrial organization of the education market, as well as the incentive schemes and con-straints faced by suppliers and demanders. Specifically, this paper analyzes whether under present market conditions, it is reasonable to expect subsidized schools competing with each other to result in better quality of education. Additionally, the question of whether higher educational subsidies imply higher schooling quality is examined. This study, which assumes informational symmetry and a static frame-work, concludes that under a voucher system like the Chilean one, many condi-tions have to be met in order to reach the desired improvement in the educational quality and efficiency. Among these conditions are the absence of local monopolies, resource availability to allow for the expansion of successful schools, the promotion of parental interest in good education for their children, the removal of the inflexibility of the Teaching Statue (Estatuto Docente), and the revision of the objective function –or the incentive scheme- of those who manage the municipal schools in order to make it more consistent with quality and efficiency purposes.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
Find related papers by JEL classification: I22 - Health, Education, and Welfare - - Education - - - Educational Finance I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
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