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Scale Economies Can Offset the Benefits of Competition: Evidence from a School Consolidation Reform in a Universal Voucher System

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  • de Haan, Monique

    (University of Oslo)

  • Leuven, Edwin

    (University of Oslo)

  • Oosterbeek, Hessel

    (University of Amsterdam)

Abstract

A large school consolidation reform in the Netherlands changed minimum school size rules underlying public funding. The supply of schools decreased by 15 percent, but this varied considerably across municipalities. We find that reducing the number of schools by 10 percent increases pupils' achievement by 3 percent of a standard deviation. A reduction in the supply of schools implies, for a given number of pupils, an increase in average school size. We present evidence that in our context scale economies dominated the effects of choice and competition. This points to an often ignored trade-off between scale and competition.

Suggested Citation

  • de Haan, Monique & Leuven, Edwin & Oosterbeek, Hessel, 2011. "Scale Economies Can Offset the Benefits of Competition: Evidence from a School Consolidation Reform in a Universal Voucher System," IZA Discussion Papers 5528, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5528
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    Cited by:

    1. De Witte, K. & Van Klaveren, C., 2012. "The effect of primary school closures on educational attainments of students," Working Papers 42, Top Institute for Evidence Based Education Research.
    2. Burgess, Simon, 2016. "Human Capital and Education: The State of the Art in the Economics of Education," IZA Discussion Papers 9885, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    school choice; competition; school consolidation; achievement; economies of scale;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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