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Educational Vouchers and Cream Skimming

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Author Info
Dennis Epple
Richard Romano

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Abstract

Epple and Romano (1998) show equilibrium provision of education by public and private schools has the latter skim off the wealthiest and most-able students, and flat-rate vouchers lead to further cream skimming. Here we study voucher design that would inject private-school competition and increase technical efficiencies without cream skimming. Conditioning vouchers on student ability without restriction on participating schools' policies fails to effect significantly cream skimming. However, by adding conditions like tuition constraints such as vouchers can reap the benefits of school competition without increased stratification. This can be accomplished while allowing voluntary participation in the voucher system and without tax increases.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9354.

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Date of creation: Nov 2002
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Handle: RePEc:nbr:nberwo:9354

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Find related papers by JEL classification:
I2 - Health, Education, and Welfare - - Education
H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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  1. Rajashri Chakrabarti, 2005. "Can Increasing Private School Participation and Monetary Loss in a Voucher Program Affect Public School Performance? Evidence from Milwaukee," Public Economics 0512003, EconWPA. [Downloadable!]
    Other versions:
  2. Raquel Fernandez, 2001. "Sorting, Education and Inequality," NBER Working Papers 8101, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June. [Downloadable!]
    Other versions:
  4. Rajashri Chakrabarti, 2005. "Do Vouchers Lead to Sorting under Random Private School Selection? Evidence from the Milwaukee Voucher Program," Public Economics 0512004, EconWPA. [Downloadable!]
    Other versions:
  5. Rajashri Chakrabarti, 2008. "Impact of voucher design on public school performance: evidence from Florida and Milwaukee voucher programs," Staff Reports 315, Federal Reserve Bank of New York. [Downloadable!]
    Other versions:
  6. Bernardita Vial, 2008. "Competitive Equilibrium and Reputation under Imperfect Public Monitoring," Documentos de Trabajo 327, Instituto de Economía. Pontificia Universidad Católica de Chile.. [Downloadable!]
  7. Fernández, Raquel, 2001. "Sorting, Education and Inequality," CEPR Discussion Papers 3020, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Francisco Martínez Mora, 2003. "Opting-out of Public Education in Urban Economies," Economic Working Papers at Centro de Estudios Andaluces E2003/52, Centro de Estudios Andaluces. [Downloadable!]
  9. Chang-Tai Hsieh & Miguel Urquiola, 2003. "When Schools Compete, How Do They Compete? An Assessment of Chile's Nationwide School Voucher Program," NBER Working Papers 10008, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Tim Besley & Maitreesh Ghatak, 2003. "Incentives, choice and accountability in the provision of public services," IFS Working Papers W03/08, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
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