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Distorted Quality Signals in School Markets

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  • Felipe González
  • José Ignacio Cuesta
  • Cristián Larroulet

Abstract

Information plays a key role in markets with consumer choice. In education, data on school quality is often gathered through standardized testing. However, the use of these tests has been controversial because of behavioral responses that could distort performance measures. We study the Chilean educational market and document that low-performing students are underrepresented in test days, generating distortions in school quality information. These distorted quality signals affect parents’ school choice and induce misallocation of public programs. These results indicate that undesirable responses to test-based accountability systems may impose significant costs on educational markets.

Suggested Citation

  • Felipe González & José Ignacio Cuesta & Cristián Larroulet, 2017. "Distorted Quality Signals in School Markets," Documentos de Trabajo 488, Instituto de Economia. Pontificia Universidad Católica de Chile..
    • Handle: RePEc:ioe:doctra:488
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    2. Gonzalez, Felipe & Prem, Mounu, 2020. "Police Repression and Protest Behavior: Evidence from Student Protests in Chile," SocArXiv 3xk5r, Center for Open Science.
    3. Bautista, María Angélica & González, Felipe & Martínez, Luis R. & Muñoz, Pablo & Prem, Mounu, 2023. "The intergenerational transmission of higher education: Evidence from the 1973 coup in Chile," Explorations in Economic History, Elsevier, vol. 90(C).
    4. Christopher A. Neilson, 2021. "Targeted Vouchers, Competition Among Schools, and the Academic Achievement of Poor Students," Working Papers 2021-48, Princeton University. Economics Department..

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    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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