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Good Principals or Good Peers? Parental Valuation of School Characteristics, Tiebout Equilibrium, and the Effects of Inter-district Competition

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  • Jesse Rothstein

Abstract

School choice policies may improve productivity if parents choose well-run schools, but not if parents primarily choose schools for their peer groups. Theoretically, high income families cluster near preferred schools in housing market equilibrium; these need only be effective schools if effectiveness is highly valued. If it is, equilibrium effectiveness sorting' will be more complete in markets offering more residential choice. Although effectiveness is unobserved to the econometrician, I discuss observable implications of effectiveness sorting. I find no evidence of a choice effect on sorting, indicating a small role for effectiveness in preferences and suggesting caution about choice's productivity implications.

Suggested Citation

  • Jesse Rothstein, 2004. "Good Principals or Good Peers? Parental Valuation of School Characteristics, Tiebout Equilibrium, and the Effects of Inter-district Competition," NBER Working Papers 10666, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10666
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    References listed on IDEAS

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    Cited by:

    1. Bastos, Paulo & Cristia, Julian, 2012. "Supply and quality choices in private child care markets: Evidence from São Paulo," Journal of Development Economics, Elsevier, vol. 98(2), pages 242-255.
    2. Hsieh, Chang-Tai & Urquiola, Miguel, 2006. "The effects of generalized school choice on achievement and stratification: Evidence from Chile's voucher program," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1477-1503, September.
    3. Stephen Gibbons & Shqiponja Telhaj, 2007. "Are Schools Drifting Apart? Intake Stratification in English Secondary Schools," Urban Studies, Urban Studies Journal Limited, vol. 44(7), pages 1281-1305, June.
    4. repec:clu:wpaper:0607-14 is not listed on IDEAS
    5. 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.
    6. Miguel Urquiola, 2005. "Does School Choice Lead to Sorting? Evidence from Tiebout Variation," American Economic Review, American Economic Association, vol. 95(4), pages 1310-1326, September.
    7. Deborah Wilson, 2008. "Exit, Voice and Quality in the English Education Sector," The Centre for Market and Public Organisation 08/194, The Centre for Market and Public Organisation, University of Bristol, UK.

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • I2 - Health, Education, and Welfare - - Education

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