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Responses of Private and Public Schools to Voucher Funding: The Czech and Hungarian Experience


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  • Randall K. Filer
  • Daniel Münich


A state monopoly in schooling followed the collapse of communism in Central Europe. The centrally planned system was abandoned. Systems comparable with educational voucher scheme, also known as school choice system, were introduced in the Czech Republic and Hungary in the early 1990s. The newly established system of school financing allocates public funds according to the number of students enrolled in a school. Accredited non-state schools, private and religious, are also eligible for public subsidies. The scope and the form of these reforms represent a unique opportunity to test conflicting hypotheses of proponents and opponents of the voucher scheme. In this empirical analysis, we test fundamental theoretical predictions of the voucher model. Specifically, we test: i) whether non-state schools are established at locations where the supply of educational opportunities provided by state schools is low or of low quality, ii) whether state and non-state schools in such a system respond to changes in demand for education, and iii) whether state schools respond to competition from non-state schools. We use detailed school level data on the whole population of schools and data on regional conditions. In our econometric model we estimate education value added, instead of relying on absolute quality of school graduates. We find that non-state schools emerge at locations with excess demand and lower quality state schools. We also find that greater competition from non-state schools creates incentives for state schools with the result that state schools slightly improve the quality of educational inputs used and significantly improve their output, quality of graduates. As concerns the technical schools, we find that non-state schools react to regional labor market conditions in terms of technical branch premium and unemployment rate. We do not find such reactions to market signals by state schools. We introduce this analysis with a review of non-state schools' development in the Czech Republic and Hungary during the 1990s.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 360.

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Length: pages
Date of creation: 01 Oct 2000
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Handle: RePEc:wdi:papers:2000-360

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Keywords: Educational finance; government expenditures and education; occupational choice; labor productivity;

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  1. Randall K. Filer & Jan Hanousek, 2001. "Output Changes and Inflationary Bias in Transition," Macroeconomics, EconWPA 0012010, EconWPA.
  2. Robert S. Chase, 1998. "Markets for communist human capital: Returns to education and experience in the Czech republic and Slovakia," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(3), pages 401-423, April.
  3. Daniel Munich & Jan Svejnar & Daniel Munich, 1999. "Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 272, William Davidson Institute at the University of Michigan.
  4. Laporte, B. & Ringold, D., 1997. "Trends in Education Access and Fanincing During the Transition in Central and Eastern Europe," Papers, World Bank - Technical Papers 361, World Bank - Technical Papers.
  5. John Micklewright, 1999. "Education, inequality and transition," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 7(2), pages 343-376, July.
  6. Filer, Randall K. & Jurajda, Stepan & Planovsky, Jan, 1999. "Education and wages in the Czech and Slovak Republics during transition," Labour Economics, Elsevier, Elsevier, vol. 6(4), pages 581-593, November.
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Cited by:
  1. Clive Belfield, 2003. "Political Preferences And The Privatization Of Education: Evidence From The UK," Education Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 11(2), pages 155-168.
  2. Ammermüller, Andreas & Heijke, Hans & Wößmann, Ludger, 2005. "Schooling quality in eastern Europe: Educational production during transition," Munich Reprints in Economics, University of Munich, Department of Economics 20191, University of Munich, Department of Economics.
  3. Wößmann, Ludger, 2008. "Efficiency and equity of European education and training policies," Munich Reprints in Economics, University of Munich, Department of Economics 19667, University of Munich, Department of Economics.
  4. Francisco Gallego, 2002. "Competencia y Resultados Educativos: Teoría y Evidencia para Chile," Documentos de Trabajo, Instituto de Economia. Pontificia Universidad Católica de Chile. 217, Instituto de Economia. Pontificia Universidad Católica de Chile..
  5. Stepan Jurajda & Daniel Munich, 2005. "Admission to Selective Schools, Alphabetically," CERGE-EI Working Papers wp282, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  6. Herrera Gómez, Marcos, 2006. "Efecto de la Competencia de la Educación Privada sobre la Calidad de la Educación Pública
    [Effect of Private Education Competition on the Quality of Public Education]
    ," MPRA Paper 30772, University Library of Munich, Germany.
  7. Randall K. Filer & Jan Hanousek, 2002. "Data Watch: Research Data from Transition Economies," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(1), pages 225-240, Winter.
  8. Jurajda, Stepan & Münich, Daniel, 2008. "Gender Gap in Performance under Competitive Pressure," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7059, C.E.P.R. Discussion Papers.
  9. Harry Anthony Patrinos & Felipe Barrera-Osorio & Juliana Guaqueta, 2009. "The Role and Impact of Public-Private Partnerships in Education," World Bank Publications, The World Bank, number 2612, August.
  10. Wößmann, Ludger, 2006. "Bildungspolitische Lehren aus den internationalen Schülertests: Wettbewerb, Autonomie und externe Leistungsüberprüfung," Munich Reprints in Economics, University of Munich, Department of Economics 19653, University of Munich, Department of Economics.


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