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Do educational vouchers reduce inequality and inefficiency in education?

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  • Akyol, Metin

Abstract

Policy debates around the topic of educational vouchers as an approach to improve the public educational system are still ongoing and a consensus on the potential benefits or drawbacks has not been reached yet. This paper models the distributional processes entailed by two alternative educational voucher systems, universal and target vouchers, by using an agent-based model of a highly heterogeneous school district. Using this approach allows to track which students actually switch schools and thereby evaluate peer effects. At the same it is possible to model an endogenous reaction of public schools in order to assess their reaction to increased competition. The results indicate an ambiguous effect of universal vouchers on low-income students. The introduction has a negative peer effect on students in low-performing schools due to “cream skimming”, i.e. highly motivated students leaving the schools. In contrast, students who switch to better schools observe a positive effect. The negative effects are partly alleviated by low- performing schools improving their educational services as a response to a decline in enrollment. When examining target vouchers which are a function of student ability, the paper shows that they allow the school district to benefit from the increased competition while avoiding the deterioration of the peer group.

Suggested Citation

  • Akyol, Metin, 2016. "Do educational vouchers reduce inequality and inefficiency in education?," Economics of Education Review, Elsevier, vol. 55(C), pages 149-167.
  • Handle: RePEc:eee:ecoedu:v:55:y:2016:i:c:p:149-167
    DOI: 10.1016/j.econedurev.2016.10.001
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    More about this item

    Keywords

    School choice; Educational vouchers; Agent-based modeling; Inequality;

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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