Choice, Competition, and Pupil Achievement

Choice and competition in education have recently found growing support from both policymakers and academics. Yet evidence on the actual benefits of market-orientated reforms is at best mixed. Moreover, although the economic rationale for choice and competition is clear, in existing work there is rarely an attempt to distinguish between the two concepts. In this paper, we study whether pupils in Primary schools in England with a wider range of school choices achieve better academic outcomes than those whose choice is more limited; and whether Primary schools facing more competition perform better than those in a more monopolistic situation. In simple least squares regression models we find little evidence of a link between choice and achievement, but uncover a small positive association between competition and school performance. Yet this could be related to endogenous school location or pupil sorting. In fact, an instrumental variable strategy based on discontinuities generated by admissions district boundaries suggests that the performance gains from greater school competition are limited. Only when we restrict our attention to Voluntary Aided schools, which have more freedom in managing their governance and admission practices, do we find some evidence of a positive causal link between competition and pupil achievement. (JEL: I20, H70, R5) (c) 2008 by the European Economic Association.