The effect of copays on the economic and ethnic segregation of primary education students: An evaluation of Chile's 2015 School Inclusion Act

Chile's 2015 School Inclusion Act promotes the phasing out of copays in so-called privatevoucher schools (largely equivalent to charter schools elsewhere). Our main research question is, What is the impact of reducing copays on (1) socioeconomic segregation, an intended target of the reform, and (2) ethnic segregation, a separate and much smaller dimension of school segregation that nonetheless might also be a ected by the reform asminorities tend to be poorer? We analyze the entire student body in primary education between 2016 and 2018 with an strategy based on three instrumental variables: (1) variationin monthly municipality unemployment and activity rates; (2) student-to-teacher ratios in public schools; and, (3) a crime index. We conclude that dropping copays would eliminate more than two thirds of socioeconomic segregation and almost half of ethnic segregation. In the article we also compare our favored administrative-led defnition of three socioeconomic statuses (low, mid and high) with alternatives based on mother's educational level or household income that rely on a sizeable sample of around 80 percent of the student body. We conclude that these sample-based alternatives lead to biased (1) segregation measurements and (2) estimates of the effect on copays on segregation.