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When Schools Compete, How Do They Compete? An Assessment of Chile’s Nationwide School Voucher Program

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  • Chang-Tai Hsieh

    (Princeton University)

  • Miguel Urquiola

    (Cornell University)

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    Abstract

    The notion that free choice is welfare-enhancing is one of the foundations of modern, market-oriented societies. This view is prominent in the school choice debate, where there is a widespread perception that public schools are inecientlocal monopolies, and that the quality of education would improve dramatically if only parents were allowed to freely choose between schools. For example, in recent work Hoxby (2001) asks \what is the range of productivity over which choice could cause productivity to vary? Recent history suggests that school productivity could be much higher than it is now - 60 to 70 percent higher." Two arguments underlie the view that choice would improve the quality of education. First, there is a widely-held belief that private schools are better than public schools. Al- though most research on this is hampered by selection issues, recent work that exploits quasi-experiments with vouchers nd some evidence that children bene t from attending private schools.1 The implication is that unrestricted choice could raise students' achieve- ment merely by facilitating their transfer to the private sector. A second, perhaps even more compelling argument for choice comes from our instinct that people and organizations respond to incentives. Therefore, by correctly aligning the incentives public schools face, choice would force their ossied bureaucracies to improve.

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    Bibliographic Info

    Paper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 123.

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    Date of creation: Jan 2002
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    Handle: RePEc:pri:cepsud:79hsieh

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    1. Cullen, Julie Berry & Jacob, Brian A. & Levitt, Steven D., 2005. "The impact of school choice on student outcomes: an analysis of the Chicago Public Schools," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 729-760, June.
    2. Newmark, Craig M, 1995. " Another Look at Whether Private Schools Influence Public School Quality: Comment," Public Choice, Springer, vol. 82(3-4), pages 365-73, March.
    3. Joshua Angrist & Eric Bettinger & Erik Bloom & Elizabeth King & Michael Kremer, 2002. "Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1535-1558, December.
    4. Evans, William N & Schwab, Robert M, 1995. "Finishing High School and Starting College: Do Catholic Schools Make a Difference?," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 941-74, November.
    5. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February.
    6. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
    7. Cecilia Elena Rouse, 1998. "Private School Vouchers And Student Achievement: An Evaluation Of The Milwaukee Parental Choice Program," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 553-602, May.
    8. Manski, Charles F., 1992. "Educational choice (vouchers) and social mobility," Economics of Education Review, Elsevier, vol. 11(4), pages 351-369, December.
    9. Caroline Minter Hoxby, 1994. "Do Private Schools Provide Competition for Public Schools?," NBER Working Papers 4978, National Bureau of Economic Research, Inc.
    10. Jimenez, E. & Lockheed, M.E., 1995. "Public and Private Secondary Education in Developing Countries. A Comparative Study," World Bank - Discussion Papers 309, World Bank.
    11. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
    12. Dee, Thomas S., 1998. "Competition and the quality of public schools," Economics of Education Review, Elsevier, vol. 17(4), pages 419-427, October.
    13. Richard J. Murnane, 1984. "A Review Essay-Comparisons of Public and Private Schools: Lessons from the Uproar," Journal of Human Resources, University of Wisconsin Press, vol. 19(2), pages 263-277.
    14. Andrea Tokman Ramos, 2002. "Is Private Education Better? Evidence from Chile," Working Papers Central Bank of Chile 147, Central Bank of Chile.
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