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Estimating the Cream Skimming Effect of School Choice

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  • Joseph G. Altonji
  • Ching-I Huang
  • Christopher R. Taber

Abstract

We derive a formula to determine the degree to which a school choice program may harm public school stayers by luring the best students to other schools. The "cream skimming" effect is increasing in the degree of heterogeneity within schools, the school choice take-up rate of strong students relative to weak students, and the dependence of school outcomes on student body quality. We use the formula to investigate the cream skimming effect of hypothetical voucher programs on the high school graduation rate and other outcomes of the students who would remain in public school. We find small effects across a wide variety of model specifications and types of modest voucher programs.

Suggested Citation

  • Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2015. "Estimating the Cream Skimming Effect of School Choice," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 266-324.
  • Handle: RePEc:ucp:jpolec:doi:10.1086/679497
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    References listed on IDEAS

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    1. 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.
    2. Epple, Dennis & Figlio, David & Romano, Richard, 2004. "Competition between private and public schools: testing stratification and pricing predictions," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1215-1245, July.
    3. 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.
    4. Lisa Barrow & Cecilia Elena Rouse, 2008. "School vouchers and student achievement: recent evidence, remaining questions," Working Paper Series WP-08-08, Federal Reserve Bank of Chicago.
    5. 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.
    6. repec:eme:rlepps:v:18:y:1999:i:1999:p:115-140 is not listed on IDEAS
    7. Thomas J. Nechyba, 2003. "Introducing School Choice into Multidistrict Public School Systems," NBER Chapters,in: The Economics of School Choice, pages 145-194 National Bureau of Economic Research, Inc.
    8. Dennis N. Epple & Richard Romano, 2003. "Neighborhood Schools, Choice, and the Distribution of Educational Benefits," NBER Chapters,in: The Economics of School Choice, pages 227-286 National Bureau of Economic Research, Inc.
    9. Elizabeth M. Caucutt, 2002. "Educational Vouchers When There Are Peer Group Effects--Size Matters," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 195-222, February.
    10. Helen F. Ladd, 2002. "School Vouchers: A Critical View," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 3-24, Fall.
    11. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
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    Cited by:

    1. repec:eee:labeco:v:48:y:2017:i:c:p:105-119 is not listed on IDEAS
    2. Miguel Urquiola & Eric Verhoogen, 2009. "Class-Size Caps, Sorting, and the Regression-Discontinuity Design," American Economic Review, American Economic Association, vol. 99(1), pages 179-215, March.
    3. Stinebrickner Ralph & Stinebrickner Todd R., 2008. "The Causal Effect of Studying on Academic Performance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-55, June.
    4. Epple, Dennis & Romano, Richard, 2014. "On the political economy of educational vouchers," Journal of Public Economics, Elsevier, vol. 120(C), pages 62-73.
    5. Hartog, Joop & Raposo, Pedro, 2017. "Are starting wages reduced by an insurance premium for preventing wage decline? Testing the prediction of Harris and Holmstrom (1982)," Labour Economics, Elsevier, vol. 48(C), pages 105-119.
    6. Farré, Lídia & Ortega, Francesc & Tanaka, Ryuichi, 2015. "Immigration and School Choices in the Midst of the Great Recession," IZA Discussion Papers 9234, Institute for the Study of Labor (IZA).
    7. Battisti, Michele, 2017. "High wage workers and high wage peers," Labour Economics, Elsevier, vol. 46(C), pages 47-63.
    8. Menezes-Filho, Naercio & Moita, Rodrigo & Andrade, Eduardo, 2012. "Entry in School Markets: Theory and Evidence from Brazilian Municipalities," Insper Working Papers wpe_284, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    9. Berg, Claudia & Emran, M. Shahe, 2017. "Microfinance and Vulnerability to Seasonal Famine in a Rural Economy: Evidence from Monga in Bangladesh," MPRA Paper 79818, University Library of Munich, Germany.
    10. repec:eee:pubeco:v:159:y:2018:i:c:p:160-182 is not listed on IDEAS
    11. Atila Abdulkadiroglu & Parag A. Pathak & Jonathan Schellenberg & Christopher R. Walters, 2017. "Do Parents Value School Effectiveness?," NBER Working Papers 23912, National Bureau of Economic Research, Inc.
    12. Neilson, Christopher A. & Zimmerman, Seth D., 2014. "The effect of school construction on test scores, school enrollment, and home prices," Journal of Public Economics, Elsevier, vol. 120(C), pages 18-31.
    13. repec:taf:vjerxx:v:109:y:2016:i:1:p:37-49 is not listed on IDEAS
    14. Facundo Albornoz & Samuel Berlinski & Antonio Cabrales, 2016. "Motivation, Resources and the Organization of the School System," IDB Publications (Working Papers) 7750, Inter-American Development Bank.
    15. Facundo Albornoz & Samuel Berlinski & Antonio Cabrales, 2016. "Motivation, Resources and the Organization of the School System," IDB Publications (Working Papers) 94958, Inter-American Development Bank.
    16. Walter Beckert & Elaine Kelly, 2017. "Divided by choice? Private providers, patient choice and hospital sorting in the English National Health service," IFS Working Papers W17/15, Institute for Fiscal Studies.
    17. repec:eee:labeco:v:51:y:2018:i:c:p:184-201 is not listed on IDEAS
    18. Maria Marta Ferreyra, 2007. "Estimating the Effects of Private School Vouchers in Multidistrict Economies," American Economic Review, American Economic Association, vol. 97(3), pages 789-817, June.
    19. Ferreyra,Maria Marta & Kosenok,Grigory, 2015. "Charter school entry and school choice: the case of Washington, D.C," Policy Research Working Paper Series 7383, The World Bank.
    20. Neilson, Christopher & Zimmerman, Seth D., 2011. "The Effect of School Construction on Test Scores, School Enrollment, and Home Prices," IZA Discussion Papers 6106, Institute for the Study of Labor (IZA).

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    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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