Searching for schools in a low quality market: Evidence from Chile

In this paper, we use survey and school level data in the Metropolitan Region (R.M.) of Chile to examine how legal and incentive changes to improve the national voucher program affected parent behavior and school responses. Using face-to-face interviews conducted with random samples of first grade parents in the R.M. in 2003 (prior to the policy shifts) and 2009 (after changes were implemented), we asked parents to tell us about the number and types of information they use to choose schools, and the distances they travel to send their children to school. We also analyze the changes in the availability of different types of private voucher schools and the quality of these schools across schooling markets with different socioeconomic environments in the R.M. We find that, while changes in some of the key aspects of the voucher program had an important effect on parent’s school search behavior, school supply response has been much slower. Parents are gathering more information, traveling greater distances, and willing to pay higher fees for better performing schools. However, while the number of private voucher schools has expanded across the R.M., there are very few quality options available to parents, especially in disadvantaged neighborhoods.