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Impact of Voucher Design on Public School Performance: Evidence from Florida and Milwaukee Voucher Programs

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  • Rajashri Chakrabarti

Abstract

This paper examines the impact of vouchers in general, and voucher design in particular, on public school performance. It argues that all voucher programs are not created equal. There are often fundamental differences in voucher designs that affect public school incentives differently and induce different responses from them. It analyzes two publicly funded voucher programs in the U.S. The 1990 Milwaukee experiment can be looked upon as a "voucher shock" program with a sudden Government announcement that the low-income public school population will be eligible for vouchers. The 1999 Florida program, on the other hand, can be looked upon as a "threat of voucher" program where the failing public schools are first threatened with vouchers, and vouchers are implemented only if they fail to meet a government designated cutoff quality level. In particular, a school getting an "F" grade for the first time is exposed to the threat of vouchers but does not face vouchers unless and until it gets a second "F" within the next three years. To analyze and compare the impacts of these two alternative designs on public school incentives and performance, I construct a theoretical model that captures the basic features of the two programs. It is an equilibrium theory of public school and household behavior where public school maximizes net revenue and households care about public school peer group quality in addition to public school effort. I use the model to analyze three alternative scenarios--a simple public-private system without vouchers, a Milwaukee-type voucher shock system and a Florida-type threat of voucher system. Providing micro-foundations to the public school payoff function, the model endogenously determines public school effort and peer group quality at each of the program equilibria. It yields three predictions. First, the effects of a Milwaukee-type program on public school effort and quality are ambiguous (where public school quality is a composite of public school effort and peer group quality.) Second, a Florida-type program will lead to an unambiguous improvement in public school effort and quality and third, these improvements will exceed the corresponding improvements (if any) in a Milwaukee-type program. Using school-scores data and a difference-in-differences estimation strategy in trends, the second part of the paper shows that these predictions are validated empirically. There is significant evidence of large improvement of the treated schools in Florida, but no consistent evidence of improvement of the Milwaukee treated schools. The findings are reasonably robust in that they survive several robustness checks including correcting for mean reversion. The design of the Florida program also enables a regression discontinuity analysis to investigate the impact of the Florida program. Interestingly, the results from this analysis strongly mirror those obtained from the above analysis. Thus both theoretically and empirically, the paper presents strong evidence that voucher design matters and in particular, the public school response under a Florida-type program is much larger than that in a Milwaukee-type program. The findings have important implications for public school reform, which are all the more relevant in the context of the present concern over public school performance.

Suggested Citation

  • Rajashri Chakrabarti, 2004. "Impact of Voucher Design on Public School Performance: Evidence from Florida and Milwaukee Voucher Programs," Econometric Society 2004 North American Summer Meetings 221, Econometric Society.
  • Handle: RePEc:ecm:nasm04:221
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    References listed on IDEAS

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    Cited by:

    1. Rajashri Chakrabarti, 2013. "Vouchers, Public School Response, And The Role Of Incentives: Evidence From Florida," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 500-526, January.
    2. Rajashri Chakrabarti, 2011. "Vouchers, responses, and the test-taking population: regression discontinuity evidence from Florida," Staff Reports 486, Federal Reserve Bank of New York.
    3. Chakrabarti, Rajashri, 2014. "Incentives and responses under No Child Left Behind: Credible threats and the role of competition," Journal of Public Economics, Elsevier, vol. 110(C), pages 124-146.
    4. Chakrabarti, Rajashri, 2008. "Can increasing private school participation and monetary loss in a voucher program affect public school performance? Evidence from Milwaukee," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1371-1393, June.
    5. Craig, Steven G. & Imberman, Scott A. & Perdue, Adam, 2015. "Do administrators respond to their accountability ratings? The response of school budgets to accountability grades," Economics of Education Review, Elsevier, vol. 49(C), pages 55-68.
    6. Akyol, Metin, 2016. "Do educational vouchers reduce inequality and inefficiency in education?," Economics of Education Review, Elsevier, vol. 55(C), pages 149-167.
    7. Chiang, Hanley, 2009. "How accountability pressure on failing schools affects student achievement," Journal of Public Economics, Elsevier, vol. 93(9-10), pages 1045-1057, October.
    8. Welsch, David M. & Zimmer, David M., 2012. "Do student migrations affect school performance? Evidence from Wisconsin's inter-district public school program," Economics of Education Review, Elsevier, vol. 31(1), pages 195-207.
    9. Rajashri Chakrabarti, 2013. "Accountability with Voucher Threats, Responses, and the Test-Taking Population: Regression Discontinuity Evidence from Florida," Education Finance and Policy, MIT Press, vol. 8(2), pages 121-167, April.
    10. Morten Anstorp Rosenkvist, 2010. "Using Student Test Results for Accountability and Improvement: A Literature Review," OECD Education Working Papers 54, OECD Publishing.
    11. West, Martin R. & Peterson, Paul E., 2005. "The Efficacy of Choice Threats within School Accountability Systems: Results from Legislatively Induced Experiments," Working Paper Series rwp05-033, Harvard University, John F. Kennedy School of Government.
    12. Ana Balcao Reis & Carmo Seabra & Luis C. Nunes, 2012. "Ranking schools: a step toward increased accountability or a mere discriminatory practice?," FEUNL Working Paper Series wp567, Universidade Nova de Lisboa, Faculdade de Economia.
    13. Rajashri Chakrabarti & Noah Schwartz, 2013. "Unintended consequences of school accountability policies: evidence from Florida and implications for New York," Economic Policy Review, Federal Reserve Bank of New York, issue May, pages 19-44.
    14. Hemelt, Steven W., 2011. "Performance effects of failure to make Adequate Yearly Progress (AYP): Evidence from a regression discontinuity framework," Economics of Education Review, Elsevier, vol. 30(4), pages 702-723, August.
    15. Wilbert van der Klaauw, 2008. "Regression-Discontinuity Analysis: A Survey of Recent Developments in Economics," LABOUR, CEIS, vol. 22(2), pages 219-245, June.
    16. Ferreyra, Maria Marta & Liang, Pierre Jinghong, 2012. "Information asymmetry and equilibrium monitoring in education," Journal of Public Economics, Elsevier, vol. 96(1), pages 237-254.
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    19. repec:mpr:mprres:6360 is not listed on IDEAS
    20. David M. Welsch & David M. Zimmer, 2015. "The Relationship Between Student Transfers and District Academic Performance: Accounting for Feedback Effects," Education Finance and Policy, MIT Press, vol. 10(3), pages 399-422, July.
    21. Brian Gill & J.R. Lockwood III & Francisco Martorell & Claude Messan Setodji & Kevin Booker, "undated". "An Exploratory Analysis of Adequate Yearly Progress, Identification for Improvement, and Student Achievement in Two States and Three Cities," Mathematica Policy Research Reports 22a6c1d142b1420dbe9ba386e, Mathematica Policy Research.

    More about this item

    Keywords

    Vouchers; Incentives; Peer group quality;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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