IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v109y2019i7p2568-2612.html
   My bibliography  Save this article

Incentives and the Supply of Effective Charter Schools

Author

Listed:
  • John D. Singleton

Abstract

Charter school funding is typically set by formulas that provide the same amount for students regardless of advantage or need. I present evidence that this policy skews the distribution of students served by charters toward low-cost populations by influencing where charter schools open and whether they survive. To do this, I develop and estimate an equilibrium model of charter school supply and competition to evaluate the effects of funding policies that aim to correct these incentives. The results indicate that a cost-adjusted funding formula would increase the share of disadvantaged students in charter schools with little reduction in aggregate effectiveness.

Suggested Citation

  • John D. Singleton, 2019. "Incentives and the Supply of Effective Charter Schools," American Economic Review, American Economic Association, vol. 109(7), pages 2568-2612, July.
  • Handle: RePEc:aea:aecrev:v:109:y:2019:i:7:p:2568-2612
    Note: DOI: 10.1257/aer.20171484
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20171484
    Download Restriction: no

    File URL: https://www.aeaweb.org/content/file?id=10018
    Download Restriction: no

    File URL: https://www.aeaweb.org/doi/10.1257/aer.20171484.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ariel Pakes & Michael Ostrovsky & Steven Berry, 2007. "Simple estimators for the parameters of discrete dynamic games (with entry/exit examples)," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 373-399, June.
    2. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 217-235.
    3. Gregory R. Weiher & Kent L. Tedin, 2002. "Does choice lead to racially distinctive schools? Charter schools and household preferences," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(1), pages 79-92.
    4. Ma, Ching-to Albert, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 93-112, Spring.
    5. Ferreyra, Maria Marta & Kosenok, Grigory, 2018. "Charter school entry and school choice: The case of Washington, D.C," Journal of Public Economics, Elsevier, vol. 159(C), pages 160-182.
    6. Raj Chetty & John N. Friedman & Jonah E. Rockoff, 2014. "Measuring the Impacts of Teachers I: Evaluating Bias in Teacher Value-Added Estimates," American Economic Review, American Economic Association, vol. 104(9), pages 2593-2632, September.
    7. Rust, John, 1987. "Optimal Replacement of GMC Bus Engines: An Empirical Model of Harold Zurcher," Econometrica, Econometric Society, vol. 55(5), pages 999-1033, September.
    8. V. Joseph Hotz & Robert A. Miller, 1993. "Conditional Choice Probabilities and the Estimation of Dynamic Models," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 497-529.
    9. Hanushek, Eric A. & Kain, John F. & Rivkin, Steven G. & Branch, Gregory F., 2007. "Charter school quality and parental decision making with school choice," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 823-848, June.
    10. Winters, Marcus A., 2012. "Measuring the effect of charter schools on public school student achievement in an urban environment: Evidence from New York City," Economics of Education Review, Elsevier, vol. 31(2), pages 293-301.
    11. 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.
    12. Currie, Janet & Fahr, John, 2005. "Medicaid managed care: effects on children's Medicaid coverage and utilization," Journal of Public Economics, Elsevier, vol. 89(1), pages 85-108, January.
    13. Karthik Muralidharan & Venkatesh Sundararaman, 2015. "Editor's Choice The Aggregate Effect of School Choice: Evidence from a Two-Stage Experiment in India," The Quarterly Journal of Economics, Oxford University Press, vol. 130(3), pages 1011-1066.
    14. Glomm, Gerhard & Harris, Douglas & Lo, Te-Fen, 2005. "Charter school location," Economics of Education Review, Elsevier, vol. 24(4), pages 451-457, August.
    15. Dennis Epple & Richard Romano & Ron Zimmer, 2015. "Charter Schools: A Survey of Research on Their Characteristics and Effectiveness," NBER Working Papers 21256, National Bureau of Economic Research, Inc.
    16. Joshua D. Angrist & Susan M. Dynarski & Thomas J. Kane & Parag A. Pathak & Christopher R. Walters, 2012. "Who Benefits from KIPP?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(4), pages 837-860, September.
    17. Patrick Bajari & C. Lanier Benkard & Jonathan Levin, 2007. "Estimating Dynamic Models of Imperfect Competition," Econometrica, Econometric Society, vol. 75(5), pages 1331-1370, September.
    18. Anup Malani & Tomas Philipson & Guy David, 2003. "Theories of Firm Behavior in the Nonprofit Sector. A Synthesis and Empirical Evaluation," NBER Chapters, in: The Governance of Not-for-Profit Organizations, pages 181-216, National Bureau of Economic Research, Inc.
    19. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    20. Nirav Mehta, 2017. "Competition In Public School Districts: Charter School Entry, Student Sorting, And School Input Determination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(4), pages 1089-1116, November.
    21. Dennis Epple & Richard Romano, 2008. "Educational Vouchers And Cream Skimming," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1395-1435, November.
    22. Robert Bifulco & Helen F. Ladd, 2006. "The Impacts of Charter Schools on Student Achievement: Evidence from North Carolina," Education Finance and Policy, MIT Press, vol. 1(1), pages 50-90, January.
    23. Lakdawalla, Darius & Philipson, Tomas, 2006. "The nonprofit sector and industry performance," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1681-1698, September.
    24. Bajari, Patrick & Hong, Han & Krainer, John & Nekipelov, Denis, 2010. "Estimating Static Models of Strategic Interactions," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(4), pages 469-482.
    25. Jesse M. Rothstein, 2006. "Good Principals or Good Peers? Parental Valuation of School Characteristics, Tiebout Equilibrium, and the Incentive Effects of Competition among Jurisdictions," American Economic Review, American Economic Association, vol. 96(4), pages 1333-1350, September.
    26. Will Dobbie & Roland G. Fryer, Jr, 2013. "The Medium-Term Impacts of High-Achieving Charter Schools on Non-Test Score Outcomes," NBER Working Papers 19581, National Bureau of Economic Research, Inc.
    27. Duncombe, William & Yinger, John, 2005. "How much more does a disadvantaged student cost?," Economics of Education Review, Elsevier, vol. 24(5), pages 513-532, October.
    28. Patrick L. Baude & Marcus Casey & Eric A. Hanushek & Gregory R. Phelan & Steven G. Rivkin, 2020. "The Evolution of Charter School Quality," Economica, London School of Economics and Political Science, vol. 87(345), pages 158-189, January.
    29. Downes, Thomas A. & Pogue, Thomas F., 1994. "Adjusting School Aid Formulas for the Higher Cost of Educating Disadvantaged Students," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(1), pages 89-110, March.
    30. Victor Aguirregabiria & Pedro Mira, 2007. "Sequential Estimation of Dynamic Discrete Games," Econometrica, Econometric Society, vol. 75(1), pages 1-53, January.
    31. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
    32. Davis, Devora H. & Raymond, Margaret E., 2012. "Choices for studying choice: Assessing charter school effectiveness using two quasi-experimental methods," Economics of Education Review, Elsevier, vol. 31(2), pages 225-236.
    33. Joshua Angrist & Eric Bettinger & Michael Kremer, 2006. "Long-Term Educational Consequences of Secondary School Vouchers: Evidence from Administrative Records in Colombia," American Economic Review, American Economic Association, vol. 96(3), pages 847-862, June.
    34. Charles T. Clotfelter & Helen F. Ladd & Jacob L. Vigdor, 2011. "Teacher Mobility, School Segregation, and Pay-Based Policies to Level the Playing Field," Education Finance and Policy, MIT Press, vol. 6(3), pages 399-438, July.
    35. Gronberg, Timothy J. & Jansen, Dennis W. & Taylor, Lori L., 2012. "The relative efficiency of charter schools: A cost frontier approach," Economics of Education Review, Elsevier, vol. 31(2), pages 302-317.
    36. Imberman, Scott A., 2011. "The effect of charter schools on achievement and behavior of public school students," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 850-863, August.
    37. Christopher R. Walters, 2014. "The Demand for Effective Charter Schools," NBER Working Papers 20640, National Bureau of Economic Research, Inc.
    38. Joshua D. Angrist & Sarah R. Cohodes & Susan M. Dynarski & Parag A. Pathak & Christopher R. Walters, 2016. "Stand and Deliver: Effects of Boston's Charter High Schools on College Preparation, Entry, and Choice," Journal of Labor Economics, University of Chicago Press, vol. 34(2), pages 275-318.
    39. Atila Abdulkadiroğlu & Joshua D. Angrist & Susan M. Dynarski & Thomas J. Kane & Parag A. Pathak, 2011. "Accountability and Flexibility in Public Schools: Evidence from Boston's Charters And Pilots," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 699-748.
    40. Robert Bifulco & Helen F. Ladd, 2007. "School choice, racial segregation, and test-score gaps: Evidence from North Carolina's charter school program*," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(1), pages 31-56.
    41. Downes, Thomas A. & Pogue, Thomas F., 1994. "Adjusting School Aid Formulas for the Higher Cost of Educating Disadvantaged Students," National Tax Journal, National Tax Association, vol. 47(1), pages 89-110, March.
    42. Neal, Derek, 1997. "The Effects of Catholic Secondary Schooling on Educational Achievement," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 98-123, January.
    43. C. Kirabo Jackson, 2009. "Student Demographics, Teacher Sorting, and Teacher Quality: Evidence from the End of School Desegregation," Journal of Labor Economics, University of Chicago Press, vol. 27(2), pages 213-256, April.
    44. Peter Davis & Eliana Garcés, 2009. "Quantitative Techniques for Competition and Antitrust Analysis," Economics Books, Princeton University Press, edition 1, number 9078.
    45. Caroline M. Hoxby & Sonali Murarka, 2009. "Charter Schools in New York City: Who Enrolls and How They Affect Their Students' Achievement," NBER Working Papers 14852, National Bureau of Economic Research, Inc.
    46. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    47. Booker, Kevin & Gilpatric, Scott M. & Gronberg, Timothy & Jansen, Dennis, 2008. "The effect of charter schools on traditional public school students in Texas: Are children who stay behind left behind?," Journal of Urban Economics, Elsevier, vol. 64(1), pages 123-145, July.
    48. Bettinger, Eric P., 2005. "The effect of charter schools on charter students and public schools," Economics of Education Review, Elsevier, vol. 24(2), pages 133-147, April.
    49. Thomas J. Nechyba, 2000. "Mobility, Targeting, and Private-School Vouchers," American Economic Review, American Economic Association, vol. 90(1), pages 130-146, March.
    50. Katja Seim, 2006. "An empirical model of firm entry with endogenous product‐type choices," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 619-640, September.
    51. Booker, Kevin & Gilpatric, Scott M. & Gronberg, Timothy & Jansen, Dennis, 2007. "The impact of charter school attendance on student performance," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 849-876, June.
    52. repec:hrv:faseco:30749073 is not listed on IDEAS
    53. Helen F. Ladd & Charles T. Clotfelter & John B. Holbein, 2015. "The Growing Segmentation of the Charter School Sector in North Carolina," NBER Working Papers 21078, National Bureau of Economic Research, Inc.
    54. C. Kirabo Jackson & Rucker C. Johnson & Claudia Persico, 2016. "The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms," The Quarterly Journal of Economics, Oxford University Press, vol. 131(1), pages 157-218.
    55. Justine S. Hastings & Thomas J. Kane & Douglas O. Staiger, 2006. "Preferences and Heterogeneous Treatment Effects in a Public School Choice Lottery," NBER Working Papers 12145, National Bureau of Economic Research, Inc.
    56. Singleton, John D., 2017. "Putting dollars before scholars? Evidence from for-profit charter schools in Florida," Economics of Education Review, Elsevier, vol. 58(C), pages 43-54.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christian Buerger, 2020. "The Influence of Finance Policies on Charter School Supply Decisions in Five States," Public Budgeting & Finance, Wiley Blackwell, vol. 40(2), pages 44-74, June.
    2. Ferreyra, Maria Marta & Kosenok, Grigory, 2018. "Charter school entry and school choice: The case of Washington, D.C," Journal of Public Economics, Elsevier, vol. 159(C), pages 160-182.
    3. Amit Gandhi & Jean-François Houde, 2019. "Measuring Substitution Patterns in Differentiated-Products Industries," NBER Working Papers 26375, National Bureau of Economic Research, Inc.
    4. Bau, Natalie, 2019. "Estimating an Equilibrium Model of Horizontal Competition in Education," CEPR Discussion Papers 13924, C.E.P.R. Discussion Papers.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dennis Epple & Richard Romano & Ron Zimmer, 2015. "Charter Schools: A Survey of Research on Their Characteristics and Effectiveness," NBER Working Papers 21256, National Bureau of Economic Research, Inc.
    2. Singleton, John D., 2017. "Putting dollars before scholars? Evidence from for-profit charter schools in Florida," Economics of Education Review, Elsevier, vol. 58(C), pages 43-54.
    3. Margaret Brehm & Scott A. Imberman & Michael Naretta, 2017. "Capitalization of Charter Schools into Residential Property Values," Education Finance and Policy, MIT Press, vol. 12(1), pages 1-27, Winter.
    4. Figlio, D. & Karbownik, K. & Salvanes, K.G., 2016. "Education Research and Administrative Data," Handbook of the Economics of Education,, Elsevier.
    5. Chakrabarti, Rajashri & Roy, Joydeep, 2016. "Do charter schools crowd out private school enrollment? Evidence from Michigan," Journal of Urban Economics, Elsevier, vol. 91(C), pages 88-103.
    6. Fabre, Anaïs & Straub, Stéphane, 2019. "The Economic Impact of public private partnerships (PPPs) in Infrastructure, Health and Education: A Review," TSE Working Papers 19-986, Toulouse School of Economics (TSE).
    7. Yusuke Jinnai, 2015. "How Does School Choice Improve Student Achievement? Estimating School-level Competitive Effects and Student-level Peer Effects," Working Papers EMS_2016_09, Research Institute, International University of Japan.
    8. Kevin Booker & Brian Gill & Tim Sass & Ron Zimmer, "undated". "Charter High Schools' Effects on Long-Term Attainment and Earnings (Working Paper)," Mathematica Policy Research Reports cfe561a4b1924b7eafb64f918, Mathematica Policy Research.
    9. repec:mpr:mprres:8005 is not listed on IDEAS
    10. Patrick L. Baude & Marcus Casey & Eric A. Hanushek & Gregory R. Phelan & Steven G. Rivkin, 2020. "The Evolution of Charter School Quality," Economica, London School of Economics and Political Science, vol. 87(345), pages 158-189, January.
    11. Buerger, Christian & Bifulco, Robert, 2019. "The effect of charter schools on districts’ student composition, costs, and efficiency: The case of New York state," Economics of Education Review, Elsevier, vol. 69(C), pages 61-72.
    12. Imberman, Scott A., 2011. "The effect of charter schools on achievement and behavior of public school students," Journal of Public Economics, Elsevier, vol. 95(7), pages 850-863.
    13. Paul B. Ellickson & Sanjog Misra, 2011. "Structural Workshop Paper --Estimating Discrete Games," Marketing Science, INFORMS, vol. 30(6), pages 997-1010, November.
    14. Tavares, Priscilla Albuquerque, 2015. "The impact of school management practices on educational performance: Evidence from public schools in São Paulo," Economics of Education Review, Elsevier, vol. 48(C), pages 1-15.
    15. Sarah A. Cordes, 2018. "In Pursuit of the Common Good: The Spillover Effects of Charter Schools on Public School Students in New York City," Education Finance and Policy, MIT Press, vol. 13(4), pages 484-512, Fall.
    16. Carruthers, Celeste K., 2012. "New schools, new students, new teachers: Evaluating the effectiveness of charter schools," Economics of Education Review, Elsevier, vol. 31(2), pages 280-292.
    17. Sanjog Misra, 2013. "Markov chain Monte Carlo for incomplete information discrete games," Quantitative Marketing and Economics (QME), Springer, vol. 11(1), pages 117-153, March.
    18. Carlson, Deven & Lavertu, Stéphane, 2016. "Charter school closure and student achievement: Evidence from Ohio," Journal of Urban Economics, Elsevier, vol. 95(C), pages 31-48.
    19. Hahn, Youjin & Wang, Liang Choon & Yang, Hee-Seung, 2018. "Does greater school autonomy make a difference? Evidence from a randomized natural experiment in South Korea," Journal of Public Economics, Elsevier, vol. 161(C), pages 15-30.
    20. Paul B. Ellickson & Sanjog Misra, 2008. "Supermarket Pricing Strategies," Marketing Science, INFORMS, vol. 27(5), pages 811-828, 09-10.
    21. Victor Aguirregabiria & Arvind Magesan, 2020. "Identification and Estimation of Dynamic Games When Players’ Beliefs Are Not in Equilibrium," Review of Economic Studies, Oxford University Press, vol. 87(2), pages 582-625.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:109:y:2019:i:7:p:2568-2612. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael P. Albert). General contact details of provider: http://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.