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The Drift to Private Schools in Australia: Understanding its Features

  • Chris Ryan
  • Louise Watson

Government subsidies have provided a major source of funds to private schools in Australia for three decades. The increasing level of private school subsidies since the mid-1970s has contributed to a steady increase in the proportion of students enrolled in private schools. This growth in the private school share of enrolments was not inevitable, but has been the outcome of government policies. We use an economic framework that focuses jointly on the price and quality of schooling and find that private schools have used government subsidies to increase the quality of their services (ie. to reduce staff: student ratios) rather than to reduce their fees. This strategy has ensured that the 10 percentage point increase in the enrolment share of private schools since 1975 has not substantially altered the socio-economic composition of their student body. One consequence is that a higher proportion of government school students now come from low socio-economic status (SES) backgrounds than 30 years ago. Therefore, schools in the government sector now educate more students from lower SES backgrounds than in 1975. The implications for public policy of these phenomena are discussed and directions for future research identified.

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Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 479.

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Length: 49 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:auu:dpaper:479
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  1. Williams, Ross A, 1985. "The Economic Determinants of Private Schooling in Australia," The Economic Record, The Economic Society of Australia, vol. 61(174), pages 622-28, September.
  2. Summers, Anita A & Wolfe, Barbara L, 1977. "Do Schools Make a Difference?," American Economic Review, American Economic Association, vol. 67(4), pages 639-52, September.
  3. Alan Krueger, 2000. "Economic Considerations and Class Size," Working Papers 826, Princeton University, Department of Economics, Industrial Relations Section..
  4. Francis Vella, 1999. "Do Catholic Schools Make a Difference? Evidence from Australia," Journal of Human Resources, University of Wisconsin Press, vol. 34(1), pages 208-224.
  5. Anh T. Le & Paul W. Miller, 2003. "Choice of School in Australia: Determinants and Consequences," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(1), pages 55-78.
  6. Henderson, Vernon & Mieszkowski, Peter & Sauvageau, Yvon, 1978. "Peer group effects and educational production functions," Journal of Public Economics, Elsevier, vol. 10(1), pages 97-106, August.
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